Business Planning Sourcebook
February 2006
Important context
Status of this document

This document has been produced by the NHSFT Unit in the Department of Health to provide a framework, which Trusts can follow, to develop five year business plans in the context of
System Reform

The Business Planning Sourcebook Sourcebook has been designed to complement those Sourcebooks already available from the NHSFT Unit in respect of Governance and HR
arrangements, and complements the ‘Applying for NHS Foundation Trusts Status’, published jointly by DH & Monitor – the Independent Regulator of NHS Foundation Trusts (NHSFTs)

This document will be reviewed on a regular basis. If you have any comments that you would like to make, please feed them back to the NHS Foundation Trust Implementation Team,
email: ftapplication@dh.gsi.gov.uk
1
Foreword
Context

System Reform underpins significant change in the healthcare market, where increased choice and contestability will mean that Trusts can no longer rely on historic patient flow and
activity patterns for their future stability

For Trusts to prosper in the new healthcare market they will need to become more outwardly facing in their business planning, to seek to exploit opportunities as they present
themselves, and to adapt their operating environment to meet changing business needs and challenges. The new governance arrangements with NHSFTs will also provide an added
impetus for directing feedback from the local population to the Trust about the strategic direction of the organisation. This will need to be underpinned by an effectively integrated and
empowering culture of staff involvement and engagement if service improvements are to be realised for the benefit of patients.

Current policy is that by 2008 all NHS Trusts will be in a position to be eligible to apply for Secretary of State support to apply for NHSFT status.

Authorisation as an NHSFT is dependent upon Monitor – the Independent Regulator for NHS Foundation Trusts – being confident and able to provide assurance to Parliament and a
wide range of stakeholders that NHSFTs will be legally constituted, financially sustainable, effectively governed and locally representative. These are essential requirements for
NHSFTs to be able to operate with sufficient autonomy, to deliver national health priorities and to become increasingly responsive to local needs

This Business Plan Sourcebook is intended to enable NHS Trusts to begin the process of ‘business’ development that will make them fit for purpose as NHSFTs . This guide has been
developed to help inform the NHS about commercially focused business planning, and builds on feedback and lessons learnt from those Trusts that have already been authorised. It is
aimed at all individuals working within NHS Trusts, not only for the Chair, Chief Executive and the Trust Board, but also for clinicians and staff at the forefront of service delivery. These
people have an active role to play in influencing and working with managers and Trust directorates to redesign and develop services to meet the needs of the local population. The
organisational culture also needs to develop from being directing and controlling to being empowering and responsibility-led. Every stakeholder in the organisation has a vested interest
in making this happen

This guide will also be a useful source of information for external stakeholders, as they work with Trusts to understand how an increased emphasis on ‘commerciality’, including
identifying and managing risk – corporate, clinical and financial, will not undermine the working relations and partnerships that currently and will continue to exist.

Diagnostic – Application Guide p13.
2
Foreword
What is a Business Planning Sourcebook?

Your Business Plan document with supporting appendices is the key submission you need to make to DH during the development phase of your application to seek Secretary of State
support to apply to become a NHS Foundation Trust. It should be seen as a road map to take your organisation forwards over the next five years. It is not a strategy for your local
health economy; it is a plan that will set out the best course of action for your Trust given the dynamics of your external environment, the strengths and weaknesses of your organisation
and the needs of your stakeholders. All organisations, regardless of their size, industry or whether they are in the public or private sector should consider these basic elements when
setting a strategic direction

A robust Business Plan should be underpinned by evidence-based rationale, consensus with internal and external stakeholders, sound financial discipline and a thorough understanding
of the short, medium and longer term risks that face your Trust. Many NHS trusts will have never gone through this rigorous long term planning process
Purpose of this document

The aim of this guide is principally to help NHS Foundation Trust applicants develop their Business Plan’s in conjunction with advice and support from the Department of Health
Implementation Team. However, this guide can also be used for all NHS Trusts that are looking to develop their business planning capabilities to enable them to operate these
effectively in the new NHS landscape

This document outlines the characteristics of good strategic planning that are universal to all organisations. It then links to, introduces and explains the key sections that each NHS
Trust should bear in mind when developing a Business Plan for example strategy, market assessment, services, finance, risk, leadership and governance. For each fundamental this
Business Plan suggests templates, frameworks and guidance notes to steer you through the process of pulling your Business Plan together

This is a guide, and not a prescriptive collection of templates and tables that you must populate. Neither has this document been designed as a complete and exhaustive collection of
guidance notes to take your Trust through the authorisation stage of your NHS Foundation Trust application with Monitor, though the principles will be relevant

The process of developing a Business Plan will draw on a wide spectrum of skills including strategic analysis, financial modelling, finance, business planning, forecasting, workshop
facilitation, communication, stakeholder management, commissioning and project management. A key requirement for any organisation going forward as a more commercially focused
business will be to ensure that such capabilities and capacity are represented at the most appropriate levels within the Trust
Feedback from early applicants

Feedback from early NHS Foundation Trust applicants suggests that preparing a Business Plan involves many new and testing challenges, but that the effort is worthwhile; Business
Plan’s that have the buy in of stakeholders (e.g. staff, patients, commissioners, SHAs, local authority's etc) are hugely powerful documents, and in puling together the document many
new NHSFTs have engaged with internal and external stakeholders at a level much deeper than before. In summary, the feedback sends a clear message that most NHSFTs are now
in much better shape to control their futures as financially viable healthcare businesses

The content in this Business Plan has been developed following an interview programme that covered 25 of the 30 NHS Foundation Trust applicants in wave 1 and wave 1a, and
canvassed the opinions of both Monitor and the NHS Financing Facility. Where appropriate, direct feedback from these sources has been highlighted in this document

An overview of the NHS Foundation Trust policy and implementation programme is set out in Appendix 1 which is titled “What are NHS Foundation Trusts?” It provides key facts and
fundamental principals of NHS Foundation Trusts and sets out the reasoning behind the policy
3
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
4
Characteristics of good strategic planning
Introduction
Introduction

Strategic plans provide essential direction to organisations. They define what an organisation wants to achieve within its planning horizon, and articulate how that organisation will
achieve it from its current position. Strategic planning documents provide comfort to stakeholders (e.g. lenders, management, employees, trading partners and other interested parties)
that tangible and achievable plans exist and that key risks have been identified and addressed. By distilling the high level strategy into more meaningful objectives, a strategic plan
provides a benchmark against which actual results can be compared and benefits can be proven. Strategic plans enable businesses to progress – by taking stock, looking ahead, and
aligning internal resources in a way that ensures the business will continue to prosper in constantly changing environments
All strategic plans need to be robust, shared, and ‘do-able’ regardless of the size, the industry, or whether the organisation sits in the public or private sector

These three characteristics are explained below and expanded on the following pages
Robust

For your Business Plan to withstand internal and external challenge it needs to be evidently the best course of action for your Trust given the long term vision of where you want to be,
the dynamics of the healthcare sector in which you will operate and the strengths and weaknesses of your organisation. Opportunities and threats to operations need to be identified,
assessed and evaluated. Strong strategic plans are living documents that actively recognise risks, then demonstrate how comprehensive and effective governance and accountability
arrangements at the corporate level will minimise the likelihood of loss

This objective forms the basis of a strategic development framework upon which this Business Plan is based
Shared

In mutual organisations everyone is responsible for implementing the Business Plan, not just senior management. Indeed it would be difficult for senior management to implement a
Business Plan alone. Successful implementation will demand active buy in from across your organisation and from your external stakeholders

Those responsible for implementing your Business Plan need to know what the plan is and what their roles and responsibilities are. Individuals, managers, clinicians and directors alike
need to be clear on what ‘accomplishing the plan’ looks like. They must also agree that the direction taken in the Business Plan is the best discernable course of action

This is best achieved by involving such personnel in the formulation of your strategy
Deliverable

A do-able Business Plan is one where the high level intents, desires and objectives of your Trust have been translated into specific and measurable actions and outcomes that are
understood at organisational, directorate and personal levels. Every person that works in your Trust will then know what he/she should be doing to help your Trust achieve its strategic
objectives. Their roles and responsibilities will be clearly articulated, and the extent of their decision making capabilities clarified

As the Business Plan is implemented you then need to monitor performance to ensure you know whether you are drifting ‘off-course’ and when you should start to take corrective action.
This is achieved through the design of performance management systems with clear key performance indicators (KPIs) that are in line with the strategic objectives set out in your
Business Plan.

The active education and empowerment of staff within the organisation will encourage ownership of the strategic objectives and indicators of achievement, whilst nurturing an increased
awareness of risk and risk management
These three concepts are illustrated further on the following pages
5
Characteristics of good strategic planning
Strategies must be based on robust, evidence-based rationale
THE STRATEGIC DEVELOPMENT FRAMEWORK
Define your vision


“What are we trying to achieve in the long term as a NHS
Foundation Trust?”
Refer to the first fundamental (Strategy) on page 22


“What is happening in our external environment and how
will this affect us?”
Refer to guidance around the PEST tool on page 31



Consider your strengths and weaknesses



What opportunities match our
vision, our external environment
and our strengths and
weaknesses?
What could we do differently?
What are the key threats to our
organisation?
Refer to guidance around the
SWOT tool on page 36
Analyse the internal environment and ask, “What are we
good or not so good at? What evidence do we have to
prove this? And what are the implications for us?”
Refer to guidance around the SWOT tool on page 36
Document key
elements in your
Business Plan
Shortlist most attractive
future initiatives
Identify key opportunities
and threats
Analyse the external environment


What actions or initiatives should
we set out that will enable us to
achieve our strategy. Initiatives
should:
 build on our strengths
 address our weaknesses
 develop our opportunities
 manage our threats
Refer to guidance on page 39



What does our high level
activity plan look like?
What level of detail do
we need to include in
the Business Plan for
each supporting
initiative?
Refer to guidance on
page 40
A key characteristic of good strategic plans is that they are supported by evidence-based rationale

The strategic plan will be determined as a consequence of undertaking a staged process, as indicated
above. Research and the resulting evidence will provide the rationale to shape the strategy
In the context of an NHSFT, this is important for the following reasons

Both DH and Monitor will expect to see evidence that your Business Plan is the best course of action for your
Trust given your long term vision of where you want to be, the dynamics of the healthcare sector in which
you will operate and the strengths and weaknesses of your organisation

Your Business Plan will need to withstand challenge throughout the consultation process, and will not be
credible if you fail to clearly link these elements together

To help you achieve the necessary degree of ‘joined up thinking’ the guidance in this Business Planning
Sourcebook Sourcebooks has been designed around the step by step approach set out above
6
Feedback from
early waves
“It made us think in a more
structured way and imposed
discipline.”
Feedback from
early waves
“The real benefit is forcing us
to look further than one year
ahead…It has changed the
mindset of the Trust from
reacting to thinking further
ahead”
Characteristics of good strategic planning
Strategies must be shared with stakeholders
THE CORRECT APPROACH
Senior Management works with key stakeholders
to provide strategic direction based on common
interpretation of facts
In the context of an NHSFT, this is important for the following reasons
 A sense of stakeholder involvement, engagement and buy-in is an intrinsic component of good
strategic plans. Successful implementation demands buy in from the personnel that work within
your organisation and from your external stakeholders; the key is to involve the principal individuals
responsible for delivery in the formation of plans

The logic is simple: resistance is often driven by ignorance. Conversely, a co-designed approach
will lead to greater ownership, commitment and chances of success
Define your stakeholders and the best means of engaging with them
Broad

Involve directorate senior management (i.e. those responsible for implementation)
 Involve external stakeholders (e.g. commissioners, SHAs, Oversight and Scrutiny Committees,
Patients etc) who have a vested interest in the services of your organisation
PARTICIPATION
OR CONSULTANTION


Involve staff; hold workshops and give presentations to get your workforce ‘on-side’
One pitfall to avoid is to try to consult with too many parties, of which many may not be central to the
future direction/needs of your Trust
Your goals in the consultation process should be to:
 Educate external stakeholders where necessary. Feedback from early waves of NHSFT applicants
suggests senior board executives are likely to need to invest time hosting ‘Q&A’ sessions to allay
fears and communicate intentions. It is then possible to build consensus and enhance commitment
to plans among key players

Reach broad consensus on activity levels over the next five years. This is a critical driver of impact
on your financial modelling and future revenue.
 Foster creative thinking and bring new objective perspectives to strategic challenges


Test the robustness of your strategy; does it withstand challenge?
Engage your directorates in broad issues of Trust direction, and discourage silo mentalities
Narrow
Analytic,
Quantitative
TYPE OF
APPROACH
NOT RECOMMENDED
Strategic Planning Group or Consultants
crunch numbers in isolation and document
proposed strategy in a report
Qualitative,
experience-based
visionary
Feedback from
early waves
“We made efforts to make
sure we communicated with
PCTs and our PCTs made
efforts to come to our events
and to stay in the loop. Our
SHA was very much up to
speed and we made sure that
our SHA director was part of
the steering board. We had a
PCT director involved too.”
NOT RECOMMENDED
CEO sets vision in isolation
7
Feedback from
early waves
It was very beneficial. It made
us engage with customers,
clinicians and PCTs. This
made us fit for purpose and
brought extra rigour and
energy to planning.”
Characteristics of good strategic planning
Strategies must be deliverable at directorate level
THE ”PLAN-DO-REVIEW” CYCLE
“Plan”
Annual directorate
business plans are aligned
to your Business Plan
document
“Review”
Well designed monitoring
and control procedures
regularly track progress
against plan
“Do”
Accountable individuals
implement your strategy
by following directorate
business plans
In the context of an NHSFT, this is important for the following reasons

The previous page explained the importance of all individuals in your organisation feeling
part of the scheme, and how communicating the results of the planning process
throughout the organisation can help achieve this

Strategic plans that are known and understood have a far higher chance of being
implemented successfully, however the planning process does not end there

As your external environment changes so your strategic plan should continuously evolve,
otherwise its integrity will be compromised. Your Business Plan should not be a
document that is written then forgotten. This ‘Plan-Do-Review’ cycle is illustrated
opposite

Explicitly align your shorter term ‘functional’ business plans to the longer term Business
Plan

your Business Plan should be a high level, clear, strategic document. Excessive
detail will detract from the key messages and if too much effort is required to read
and digest your document no-one will use it

however individuals still need to understand where their daily contributions fit and
therefore it is important that lower-level functional plans are aligned to the Business
Plan

Your governance procedures should include the regular monitoring of predetermined key
performance indicators (KPIs) set out in your business plans. This ‘control process’ will
inform when you are drifting ‘off-course’ and when corrective action is necessary

KPIs should be congruent with your long term strategic objectives that, in turn, will be
aligned to your overall vision

This Business Planning Sourcebook Sourcebook provides guidance on setting long term
strategic objectives (the first fundamental - ‘strategy’) and reiterates the need to set out
the high level systems and controls that will enable your board to track progress as you
go (the seventh fundamental - ‘governance’)
Feedback from
early waves
“The five year financial plans
are now living documents and
tools.”
8
Feedback from
early waves
“Workshops involved many
people and made people more
outward and forward looking.
People can now align their
actions with the hospital’s
strategy.”
Characteristics of good strategic planning
Critical success factors and potential pitfalls

This Sourcebook has been based on a series of interviews with early NHSFT applicants. Clearly the experience of developing Business Plans has varied between Trusts by virtue of
the processes and people involved, however analysis of the experiences of early applicants has been summarised below
CRITICAL SUCCESS FACTORS

Agreeing the structure for the Business Plan early on, and populate it with accepted
wisdom and existing knowledge where possible

Key stakeholder “buy in” (the Board, senior directorate management, staff and
external stakeholders) – making sure they understand the nature of the process and
what the results will be, both for them and for your Trust

Identifying underlying issues that are driving the need for the development of a
strategic plan. This is more than just an application process

Identifying the key constraints to the execution of a new strategy (e.g. infrastructure
or capabilities)

Developing performance goals and using the Business Plan as a standard for
measuring success at the different levels of your organisation

By informing directorate business plans your Business Plan should form part of a
continuous ‘plan-do-review’ cycle across all levels of the organisation

Your Business Plan should be developed to a strict timetable to minimise disruption
to day-to-day business. However do not assume the Business Plan can be done
easily alongside your everyday commitments. Demands on the time of senior
planning and finance teams will be high

Base your Business Plan on activity forecasts that you believe in, and that have been
discussed with commissioners. Highlight differences where they exist, and bottom
them out

Base your plans on fact, and provide evidence that demonstrates the rationale
behind your decisions and future course of action

Using appendices wherever possible to ensure a clear, concise structure is
maintained
POTENTIAL PITFALLS

Writing the Business Plan “by committee” with not enough central co-ordination

Wasting time and effort by starting to perform detailed analyses before broad
direction is agreed

Failure to maintain consistency of assumptions throughout your document

Failure to explicitly connect market developments to volumes and activity

Failure to connect volumes and activity to costs and capacity issues

Delays in engaging internal and external stakeholders in the planning process

Lack of challenge to assumptions

Lack of “out-of-the-box” thinking

No, or very limited, sensitivity analyses to test the robustness of your plans

Assuming the plan can be introduced without a critical appraisal of current ways of
“doing business”

Lack of discipline in structuring and writing your document, leading to long and wordy
passages that very few can or will read

Lack of ownership of the plan on the part of those who will be trusted with delivering it
9
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
10
Getting started
Introduction


If you have been made responsible for pulling together the Business Plan for your Trust you will need to plan your approach to the coming months. If you haven’t already, you will need
to:

get up the learning curve so that you understand the extent to which strategic direction has already been established within your Trust

meet on an individual level with your board and senior management to flush out issues and concerns that will have an impact on your approach. This will also put you in a stronger
position to facilitate future workshops involving these individuals

build a clear picture of exactly what you need to produce, by when

organise an effective project team around you and ensure that the Business Plan efforts are given suitable priority within your organisation

understand the respective roles and responsibilities of your Trust, the DH and Monitor in the application process
The task may seem daunting, however it is likely that a lot of the information you need already exists in some form. Pull together what you already have and slot this into whatever
template or Business Plan ‘storyboard’ you have developed. This will get you moving and in a better position to address the task ahead
11
Getting started
Initial steps

The following flow diagram presents a suggested approach for individuals who have the overall responsibility for developing the Business Plan. Whatever your position within the
organisation, be it Chief Executive, Finance Director or Project Director, the following steps will mark the start of the business planning process
1. GET UP THE LEARNING CURVE

5. DOCUMENT WHAT YOU KNOW ALREADY

You will already have information to support many of
the initiatives that need to be described in the
Business Plan, so much of the work should be
formalising the documentation of what you already
know rather than looking for new information
 Set out the rationale behind the main initiatives that
are already underway (the ‘driver’ behind the
initiative, key costs and benefits, timescales, key
risks etc)
 You will need to do the same for future initiatives
Depending on your personal background, building
this understanding may or may not be necessary
 It involves an initial data gathering exercise to
understand what information already exists and to
inform your ‘kick-off’ discussions with the Board and
other key stakeholders
Section 4 : Tips for initial data gathering
PAGE 40: Documenting key initiatives in your
Business Plan
GETTING STARTED
You are responsible for
pulling together the
Business Plan for your
Trust. Where do you start?
This page should ensure you
set off on the right foot
2. KICK OFF DISCUSSIONS WITH THE BOARD

In advance of engaging with external stakeholders
meet with your Board and executive level
management on an individual basis to:
 promote a shared understanding of what your
Business Plan needs to achieve
 gather thoughts and reservations around
strategic direction and supporting rationale
 understand what they perceive to be the benefits
and concerns of NHSFT status
 These discussions will help you understand the
different perspectives within your Trust, and plan for
forthcoming workshops and communications
3. GET A SENSE OF WHAT YOU ARE AIMING
FOR
4. ORGANISE WHO WILL DO WHAT


The process of pulling together the Business Plan
must be led by a central ‘project office’
 The project manager needs to ensure a project
management structure is in place to ensure
consistency of assumptions across the document
 The project manager is responsible for making sure
the Business Plan ‘stacks up’
It will be easier to tailor your approach to pulling
together your Business Plan if you start with the end
in mind
 Once you have had time to assimilate the findings
from your initial discussions with key stakeholders
you should be in a position to pencil an outline of
your Business Plan document
 With a structure, or “storyboard” in place you can
start to think about what analysis you need to
it of each “fundamental” section provides
The populate
first page
PAGE 13: A suggested project management structure
PAGE 14: High level timetable for the process
Key:
= Working tools
12
an illustrative storyboard for your Business Plan
document
Getting started
A suggested project management structure
This project management structure is merely a guide



The development of a business plan is not an easy task. As
indicated earlier, a project team will need to be formed to
manage the programme of activity. A suggested steering
group structure is indicated below
You will need to design the most appropriate structure given
the specific characteristics of your organisations. However
ensure you take into account the skills, capabilities and
capacity of your people
Whatever structure you
choose, ensure the production
of your Business Plan is given
enough priority, resource and
board-level support so that the
iterative process of producing
an Business Plan can be
managed
STEERING GROUP
Lead: Chief Executive
Members: Full board and non-executives




Ensure team remains on track
Challenge the Project Director
Resolve high level issues
Sets strategic direction
PROJECT OFFICE
Project Director
Project Manager



The Board level sponsor
Responsible for ensuring the project is suitably prioritised and
resourced




EXTERNAL STAKEHOLDERS
Will agree high level activities, timescales and responsibilities
Monitors and reviews work streams for consistency of
assumptions
Manages the interface with external stakeholders
Maintains the Corporate Risk Register
Manages submission of documents to DH to timetable
Membership
As appropriate (SHA, PCTs, local
authority, patient groups, workforce
representatives…
Elements of your submission
STRATEGY DEVELOPMENT
FINANCIAL AND BUSINESS MODELLING
GOVERNANCE
HR
Lead: A senior official with long term planning capabilities
Lead: Finance Director
Lead: Chief Executive
Lead: HR Director
Responsibilities

Coordinate sub-work streams (setting the vision, internal
capability assessments, supporting rationale for existing
initiatives, external benchmarking etc)

Facilitation of workshops

Liaise with the Financial, Governance and HR work stream
leads

Will collate contributions, write and edit the Business Plan
document
Responsibilities

To produce 5 year financial model that is
aligned to the Business Plan

To ensure consistency between activity,
capacity, resource and financial plans

To ensure the model sensitivities reflect the
key risks identified in the strategy
Responsibilities

To ensure the links are made between the
new governance arrangements, the active
involvement of the membership and the
business plans

To ensure appropriate corporate governance
is in place to demonstrate fitness for purpose

To prepare draft constitution to satisfy
organisational needs and comply with statute
Responsibilities

To ensure that the appropriate links are
made between workforce development,
workforce requirements, recruitment and
retention and delivering service plans

To provide evidence that organisational
culture change is underway, with new ways
of working embedding into operations to
improve performance and productivity
Wave 1a Feedback
"Good project management is key to avoid the process of
producing your Business Plan getting too time consuming. Get a
clear project plan that everyone can follow, with clear lines of
accountability. Ensure all meetings have clear agendas and
minutes are taken. You need a project team that will run this
iterative process - a project manager with admin support)"
13
APPLICATION PROCESS FOR WAVE 3
DH Entry Point
Assess-ment
stage
DH development
phase (DH)
 Provide developmental
Purpose
3 months Monitor
SofS Support
9 months DH
Timing
 Endorse DH
support for FTs in
preparation for Monitor
assessment
 2 or 3 star rating must be
Scope
achieved to enter the
process
support for
application
 Provide developmental/support
 Complete-ness
(Integrated Business Plan,
including Governance and HR)
check of
authorisation
requirements
 Guidance for public consultation
 Consideration of
the diagnostic
programme
(Wave 3 only)
and historical
due diligence
Authorisation
(Monitor)
 To authorise
applicants for FT
status
 Legal compliance
 Financial viability
– Short term (W/C opinion)
– Long term
 Governance proposals
– Financial reporting (opinion)
– Election process
– Membership
– Board structure
3rd Party input
 Third party assistance/support with
development of the Integrated Business
Plan
 Third party report by independent
accounting firm commenting on
preparedness of applicant and covering
commentary on:
 Key issues on the Integrated Business
Plan
 Historical performance
 Normalised position
 FRP report and action plan
 Consideration of the diagnostic
programme
14
 Third party report by
independent accounting
firm covering:
 Working Capital
Review
 Conclusion on
Financial Reporting
Procedures
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
15
Structuring and developing your Business Plan
Introduction

This section of the Business Plan Sourcebook introduces and explains the nine focus areas that are central to every Business Plan:

Executive Summary: where you want to be, and how you will benefit from NHSFT status

Profile: a summary of your NHS trust and how it currently operates

Strategy Goals: the trusts vision and plans for the future, the rationale behind them and an indication of what success would look like

Market assessment: a high level analysis of the current health economy including private providers

Service development plans: how services will change and how this is aligned to the trusts SWOT analysis

Finances: how the money stacks up

Risk what could go wrong and how you will mitigate against this

Leadership & workforce: how the trust board operates and the attitude surrounding the workforce

Governance: how you will stay in control

Do not regard the focus areas as mutually exclusive; the Business Plan is a holistic record of your strategic plan and there should be some overlap between the sections. The existence
of overlap between the fundamentals is part of what will make your Business Plan hang together as one coherent document

Against each fundamental this Business Plan starts with an example ‘storyboard’, or contents page, in order to provide you with a high level impression of how each section of your
Business Plan document should flow

you can use these storyboards as a start point, but don’t mistake them for a prescriptive list of everything you need to do

they will not be used to “score” your application, and they are deliberately less detailed than the evidence required in the Business Plan. As an aide memoire, a self-assessment
checklist has been developed and is included in appendix 2

Following each example storyboard, this Sourcebook sets out structured guidance around those areas of the Business Plan that early NHSFT applicants have found most challenging.
In order to avoid confusing the key messages this document does not provide detailed guidance on the more straight forward areas

The process of developing your Business Plan will require input from across your organisation and from external stakeholders. Board level sponsorship will ensure this process is
assigned suitable priority. To achieve this a project director, who is ideally a member of the executive board should support your project manager

Throughout this section you will see comments, links and tips from previous NHSFT applicants in wave 1 and wave 1a. Their experiences should provide some useful insights for your
own process
16
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
17
Executive Summary
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
EXECUTIVE SUMMARY
1.
Executive Summary
1 Executive summary
2.
Profile
3.
Strategy
4.
Market assessment
5.
Services
6.
Finance
7.
Risk
8.
Leadership & Workforce
9.
Governance
1.1.1
Vision and strategic goals–Rationale for FT
1.1.2
Culture and environment to be created
1.1.3
Market assessment
1.1.4
Performance overview
(historical & future)
1.1.5
Summary SWOT
1.1.6
Key risks and mitigation
The Executive Summary section of your Business Plan


Your background section should include a brief history of how your Trust has developed
to where it is today. This provides essential context to your Business Plan. You should
be able to do this without detailed guidance. The challenge is often to keep this section
brief and succinct

set out what characteristics (clinical, financial, cultural or otherwise) define your Trust
from others

give the reader a high level view of the underlying performance of your Trust
When you set out your vision you need to articulate your high level ambitions as a NHS
Foundation Trust


Note:
This example storyboard is not an attempt to order each of the Business Plan self assessment indicators within the
framework of a document. Please refer to appendix 2 for the self assessment check list
18
so clearly articulate how your Trust is going to gain from the freedoms afforded to
NHS Foundation Trusts (i.e. the compelling case for change)
Make sure your vision statement, supporting strategic goals, and your definition of
successful performance against these goals are brief and easily understood by patients,
staff, the local population and your other stakeholders. Also, make sure that your
organisation is aware of the risks that it may face and understand how your organisation
will minimise these to operate within such an environment
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
19
Profile
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
PROFILE
2
Example Profile of your NHS Trust
1.
Executive Summary
2.
Profile
3.
Strategy
4.
Market assessment
2.1.1
Overview
2.1.2
Range of Services
2.1.3
Activity
5.
Services
2.1.4
Protected Assets
6.
Finance
2.1.5
Finance
7.
Risk
2.1.6
Target performance
8.
Leadership & Workforce
2.1.7
Summary of contractual relationships
9.
Governance
2.1.8
Overview of other procurement arrangements
2.1.9
JVs and partnership arrangements
Note:
The Profile section of your Business Plan

This section will cover the basic details of who the Trust is and the type of services it
provides to the local population. It should inform the reader of how these services are
provided and an overview of the key achievements – clinical, performance and financial
in recent years

The range of services sections should include a table listing the services provided and
an indication of the relative size to the Trust and a table listing the protected and non
protected assets

This section will include details of any current significant contracts or details of shared
service agreements

The any partnership arrangement or joint ventures (including section 31 contracts) also
need to be outlined in terms of roles and responsibilities, key financial terms, duration
and governance arrangements
This example storyboard is not an attempt to order each of the Business Plan assessment criteria within the
framework of a document.. Please refer to appendix 2 for the self assessment check list
20
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
21
Strategy
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
STRATEGY
3
Strategic goals
3.1.1
Trust Vision
3.1.2
Strategic goals
3.1.3
Rationale for FT status
3.1.4
Summary of outcome of consultation process
1.
Executive Summary
2.
Profile
3.
Strategy
4.
Market assessment
5.
Services
6.
Finance
7.
Risk
8.
Leadership & Workforce
9.
Governance
The Strategy section of your Business Plan
Note:

This section will cover the vision of the Trust

It should explain the reasons behind the FT application ie what FT status will mean in
terms of delivering the strategy and vision of the trust by explaining how the freedoms
given under FT status will be realised for the benefit of patients, the community, the staff
and the organisation. This will also describe how the cultural environment will need to
develop and change to operate as an independent body as well as describing how the
new governance arrangements and membership will be exploited to further develop and
enhance service provision.

The strategic goals will describe the rationale and timeline of each strategic objective,
with clear understanding and indicators of how success will be measured, the major risks
to achievement and high level mitigation strategies.

The consultation section should include details of the consultation process, including th
timeline and provide further information on:
This example storyboard is not an attempt to order each of the Business Plan assessment criteria within the
framework of a document. Please refer to appendix 2 for the self assessment check list.
22

the outcome of the consultation process,

the type of information provided, response received to date and how this has
influenced the final strategy

any stakeholder analysis performed and how stakeholder relations are currently
managed.

Use of external advisors during the consultation section, if applicable

Stakeholder analysis – summary of representation i.e. special interest groups (can be
provided as an appendix to document)
Strategy
An introduction to vision statements
VISION: “Where you want to be and how you will benefit from NHSFT status”

Early applicants have not found writing the ‘Trust Background’ sections of their submissions enormously challenging, however there has often been confusion around what a “vision
statement” is. In short, setting out your strategic direction requires a clear understanding of:

where you are now (background)

where you want to be (your vision)

what you need to do to get there

Vision statements typically comprise a concise, high level, inspirational summary of where an organisation wants to be at the end of its planning horizon. A vision should be regarded as
a unifying idea that is core to your organisation and links together each functional area

Vision statements are commonly geared towards meeting the needs of stakeholders - internal and external groups (e.g. patients, staff, commissioners etc) that have a vested interest in
your organisation

Since vision statements are typically pitched at a very high level, they need to be underpinned by a number of more specific strategic objectives to be actionable and measurable within
a timeframe. These objectives can be grouped thematically and mapped to broad categories of your stakeholders’ requirements (e.g. patient access, quality of clinical care etc)

In the context of applying for NHSFT status, it is important you include consideration of how you will take advantage of the additional freedoms and flexibility that comes with being an
NHSFT. The onus is on you to show that being an NHSFT is an essential element of your future strategic direction. For example, your strategic goals should consider how you and
your stakeholders will benefit from some of the following:

greater access to capital

the ability to enter into commercial partnerships

the ability to enter into joint ventures

greater staff, patient and community involvement

In turn, your strategic objectives should be assigned corresponding key performance indicators (KPIs) to enable you to measure progress. In this sense, KPIs are essentially a
description of what ‘success’ or ‘achieving the plan’ might look like

This section of the Business Plan gives examples of vision statements from other NHS organisations, many of which are Foundation Trusts, and proposes a step process to help you
develop your own unique vision statement and set of strategic objectives
Feedback from
early waves
“Fantastically beneficial, it
was a huge piece of work,
but invaluable in terms of
clarifying our vision and
strategic direction for the
next five years, which is why
we are keeping it as a live
document. We realised the
full potential of the document
as time went on.”
23
Strategy
Examples of high level vision statements

Below are examples of vision statements that have been developed by earlier waves of NHS Foundation Trusts. Not surprisingly a common theme to most is the focus on quality of
care for the benefit of patients being served. Importantly the statements also include specifics that set their organisations apart from others

Strategic goals will flow from these vision statements and through into directorate-level business plans throughout the respective organisations
“It is the vision of all at the Liverpool Women’s
Hospital to remain committed to developing and
providing the best possible healthcare for women,
babies and their families in Liverpool. In the case of
our Specialist Services this extends to Cheshire and
Merseyside, the North West of England, the Isle of
Man and beyond”
“As a new NHS Foundation Trust, Cambridge
University Hospitals NHS Foundation Trust will be
an academic clinical centre of international stature
contributing to the wealth and well-being of the
communities we serve through the provision of care;
The generation of new knowledge; and the
education of health care staff”
Source:
Source:
Cambridge University Hospitals NHS Foundation Trust
“UCLH is committed to delivering top quality
patient care, excellent education and world class
research”
Source:
Liverpool Women’s NHS Foundation Trust
“Sheffield Teaching Hospitals will maintain its
position as one of the premier performing NHS,
Academic and Teaching Centres in the UK and
will do so as a partner organisation in the
highly successful health systems in South
Yorkshire”
Source:
Sheffield Teaching Hospitals NHS Foundation Trust
“We want to provide patient centred services,
where each patient has the best support for their
care and rehabilitation regardless of specialty or
organisational boundaries.”
UCLH NHS Foundation Trust
Source:
24
Royal National Hospital for Rheumatic Diseases
Strategy
Defining your vision and setting strategic goals
To refine your Trust’s vision statement, try using this methodology

The steps outlined below would work well in a strategic planning workshop

Brainstorm to clarify key stakeholder groups

Brainstorm to clarify what each
stakeholder group requires/needs from you
Your organisation may already have developed something that fits the description of a
vision statement or set of strategic objectives, though this material is unlikely to
incorporate specifics around how you plan to benefit from the greater freedoms afforded
to NHS Foundation Trusts

Categorise stakeholder requirements
(e.g. patient access, quality of clinical care etc)
you may wish to hold an internal workshop for senior executive and clinical
management first, and then test the findings of that workshop with wider stakeholder
groups both internal to your organisation (i.e. staff, consultants) and external to your
organisation (e.g. patients, local authorities etc) to build consensus
to avoid reinventing the wheel, this will still form a useful start point for the planning
workshops or discussions participants

Test how your existing vision maps to the categories of
stakeholder requirements (anything missing?)
In forming your vision, you will probably need to make decisions around which
stakeholder requirements should take priority. This will be Trust specific, but should still
be an objective exercise

Develop strategic objectives and define “successful
performance” against each stakeholder requirement
As you run through the process illustrated, the vision statements and strategic objectives
of other trusts may help you check that you haven’t missed anything; however do bear in
mind that the best vision statements are unique and set organisations apart from each
other

The next section provides a framework for developing strategic objectives
DEVELOP FINAL VISION STATEMENT
Feedback from
early waves
“We found the consultation
process really useful. It has
certainly given our
organisation a clear vision,
which we could then share
with our local health
economy.”
25
Strategy
A template to structure your thoughts
The output of the exercise to refine your strategic objectives could be summarised in the following framework

The strategic objectives developed should, in turn, be devolved into operational objectives for individuals working within the organisation. This will make the link between the high level
vision for the Trust, directorate plans and the day-to-day activities of employees
Our key stakeholders
Categories of stakeholder
requirements
Strategic objectives
Success as measured against KPIs

Patients


PCTs
Achievement of Healthcare Commission standards that, on
average, exceeds that of our competitors

GPs
We want to deliver the highest quality of
accessible clinical care that is convenient
for patients, and based on the needs of
the local population


Good quality and accessible
clinical care

Staff

Patient experience

The provider of choice in our locality for selected specialties
Local population
We want patients requesting to be
treated at our Trust



Local authority

Staff experience at work

Private sector partners

Key suppliers
We want an excellent, motivated
workforce that puts the patient first and is
proud to work here


Doubling of rate that new staff are sourced from existing
staff contacts; halving of staff turnover rates; average length
of employment increased from three years to four years

SHA

Buildings and equipment



Universities
We want suitable facilities, high-tech
equipment and a clean hospital
environment
15% improvement in all efficiency ratios; better care
pathways, lower backlog of equipment requisitions; top
national decile for infection rates

Others


Cost effectiveness

We want modern, high quality systems,
processes, protocols and care pathways
that support the efficient and effective
delivery of our services

NHSFT membership
ALOS shortened from 4.5 days to 3.5 days; integrated
clinical systems, full EPR compliance, management
‘dashboard’ information easily produced; CIPs fully achieved

Closer ‘cross-boundary’ working

We want to work alongside our local
partners to shape the delivery of
healthcare in our locality

Representatives from all Boards regularly present at monthly
‘patch-wide’ planning meetings
We want the people we serve to feel
involved in the decisions that shape our
future

Note:
(a)
These elements of the vision statement are indicative only to give you an idea of how a vision night be framed. You will need to draft your own statements based on the process you have been through and the particular circumstances
of your Trust

Involvement

26
Positive response to survey canvassing whether governors
and members feel their views are suitably represented
Strategy
Examples of strategic goals: the Metropolitan Police
Clearly, examples of vision statements and strategic objectives can be seen in other non-NHS organisations. Below is an example of how the Metropolitan Police Authority
has set itself five high level strategic objectives within its three year strategic framework document
THE FIVE STRATEGIC GOALS FOR THE METROPOLITAN POLICE
DEVELOPING SAFER COMMUNITIES

“We will make London a safer place for those
who live in, work in and visit the capital”


The framework sets out five clear goals that form the
basis for selection of the priorities and objectives that are
published in annual plans. In addition, the framework
helps to prioritise the allocation of resources – both
people and capital expenditure

‘Towards the Safest City’ goes on to set out for each
strategic goal how the Met Police will achieve it, examples
of key initiatives to drive forward its aims, and how the
organisation will know if it has succeeded
REFORMING THE DELIVERY OF POLICING
SERVICES

“We will deliver a programme of change in
the way we deliver policing to London that
reflects the principles of public sector reform
- identifying and implementing first those
elements we consider to be of greatest value
to Londoners”
Source:
‘Towards the Safest City’ is the Met Police’s three year
strategic framework document. It is consistent with the
National Policing Plan that sets out Government priorities
to policing
SECURING THE CAPITAL
AGAINST TERRORISM

We will prevent and disrupt terrorist activity, providing
residents, workers and visitors with the reassurance that
London is safe
“Towards the Safest City, The Strategy, Delivering Policing for Londoners”, Metropolitan Police Authority, 2003-2005
27
REVITALISING THE CRIMINAL
JUSTICE SYSTEM

“We will lead the drive to make the criminal
justice system trusted and respected by
victims, witnesses and offenders”
DEVELOPING SAFER COMMUNITIES

“We will seek to enhance the total number of
police officers available for deployment,
maximising the visible operational uniformed
police family. We will provide effective
leadership, train and deploy our inclusive
workforce to meet the challenges and
priorities facing us, and manage both the
growth in numbers and the specialist
requirements for employees with different
skills and backgrounds”
Strategy
Examples of strategic goals: Central Cornwall PCT
Some good examples of vision statements and strategic goals can be seen in other NHS organisations. Central Cornwall Primary Care Trust has produced a five year
strategic document and though the terminology is slightly different the principles are exactly the same
CENTRAL CORNWALL PRIMARY CARE TRUST
“Core purpose” (or ‘vision statement’)
Strategic goals
“To maximise the health and well-being of the people within
Central Cornwall by delivering and securing healthcare
services and through partnership working”

Patient and public involvement

“We will actively engage local people in the way services are planned
and delivered”

Staff

“We will develop and empower staff who are the prime movers in
bringing about continuous improvement”

Leadership and management

“We will clarify and sustain its vision of the future, encouraging others
to follow by example”

Financial stewardship

“We will achieve and maintain financial balance to earn space and
resources to be innovative”

Health

“We will reduce health inequalities and achieve a greater emphasis on
‘health’ and prevention as opposed to ‘health services’”

Communication

“We will develop and communicate a shared vision of the future and
maintain an inclusive approach to its attainment”

Partnership

“We will forge collaborative relationships with the Statutory, Voluntary
and Independent sectors”

Planning

“We will build on existing practices to maintain discipline and rigour in
the Trust’s planning processes”

Capital investment

“We will harness the LIFT programme to improve and modernise the
community and primary care estate”

Information management and
technology

“We will develop capacity to meet national performance requirements
and local customisation”
Characteristics of an achievable model of health and social
care in five years time would include:

Extended primary care teams remaining the essential building
block of a more accessible primary care service

Enhanced use made of existing community hospitals, integrated
with the development of diagnostic and treatment centres and
closely linked to specialist hospital provision

Development of Primary Care Resource centres in areas not
served by a community hospital

The Truro Health Park providing health and social care services
to local residents and serving as a reference model for other
urban centres in central Cornwall

Active prevention programmes and extensive use of new
technologies

NHS Direct serving as the single gateway to health and social
care and as a means of tele-monitoring in patients own homes

Extensive training programmes to enable local practitioners to
fulfil new roles and address changing morbidities

Partnership agreements with patients collectively and individually
to enable greater self care
28
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
29
Market Assessment
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
MARKET ASSESSMENT
1.
Executive Summary
4
Market Assessment
2.
Profile
4.1.1
Description of local health economy
3.
Strategy
4.1.2
Illustrative map of local health economy
4.
Market assessment
4.1.3
Key factors driving demand (e.g.. demographics,
population trends)
5.
Services
4.1.4
Objectives of LHE
6.
Finance
4.1.5
Contribution of applicants strategy to the LHE
7.
Risk
4.1.6
Major changes in external environment/competition
8.
Leadership & Workforce
4.1.7
Summary PEST analysis
9.
Governance
4.1.8
Competitive factors i.e. Impact of patient choice, ISTC & other
4.1.9
How the trust will address these factors
4.1.10
Summary of how the trust performs against
competitors
The Market assessment section of your Business Plan

All Trusts must be ‘market facing’. This section of the Business Sourcebook illustrates
how market issues and trends need to drive your decisions around the future services
you will provide

Ensure that the narrative, supporting graphics, charts and tables that you include in the
market assessment section of your Business Plan collectively demonstrate a thorough
understanding of your marketplace and your position in that marketplace, borne out by
quality research

Note:
This example storyboard is not an attempt to order each of the Business Plan assessment criteria within the
framework of a document. Please refer to appendix 2 for the self assessment check list.
30

your services should be aligned with changing demand and commissioning patterns.
You will need to demonstrate that you have analysed, anticipated and responded to
those patterns

Neighbouring healthcare providers may provide similar services. You need to
demonstrate that you have analysed, anticipated and responded to developments in
the ‘supply base’
Specific guidance around the PEST analysis tool follows. PEST stands for Political,
Economic, Social and Technological factors that may impact on your Trust
Market Assessment
Analysing the external environment
The PEST analysis
POLITICAL (and regulatory)
ILLUSTRATIVE EXAMPLE OF PEST ANALYSIS
Factor
Impact on us
Potential actions and initiatives
Patient Choice

Despite ISTC programme, the
following suggests we are unlikely to
lose significant levels of work:
 low waiting times
 moderate elective care base
However, acute parking shortages
and patient transport/accessibility
issues may be an issue

Roll out is uncertain, however initial
estimates suggest we could gain by
anything between £2 million and £6
million per annum

Financial pressures will restrict
ability of commissioners to fund
activity
Commissioners may be unwilling to
commit to realistic activity plans at
the start of the year


National tariffs
and PbR
Financial deficit in
local health
economy


ECONOMIC






Clinical staff
shortages

Tight clinical labour market may
undermine our recruitment plans
and force us to rely on agency staff




Ensure activity plans are based on
conservative estimates
Increase activity in more specialist
areas
Invest in multi-story car park on
existing site
Establish network of satellite
outpatient clinics

The PEST analysis tool is designed to help you demonstrate a thorough
understanding of the external environment in which you operate and to
articulate how future initiatives and service delivery plans are in line with
issues, trends and developments at both the local and national level

You will need to brainstorm the external factors that may impact on your
Trust, now and over the course of your projections

Set out the national issues, for example under system reform, affecting
all trusts as well as particular factors that you will need to address locally

You may also wish to do this for select directorates, and then aggregate
the results at Trust level
Ensure financial model is sensitised
accordingly and develop contingent
plans for each outcome
Invest in coding systems to ensure
activity can be reclaimed from
commissioners
Combination of initiatives including:
 local reconfiguration of services
 shift to higher daycase rates
(65/35 by 2010)
 joint procurement initiatives
 shared support services (clinical
and back office)
Need to manage risk of
overperformance
Combination of workforce initiatives
better forward planning of resource
requirements (linked to activity
plans)
marketing drive to target bottlenecks
(i.e. cardiologists, radiotherapists,
ITU nurses and midwives)
agency framework contracts and
tight authorisation controls
31
Feedback from
early waves
“The Business Plan process
was useful in that it forces
the Trust employees to look
more externally and
understand the outside
environment better.”
Market Assessment
Analysing the external environment (continued)
The PEST analysis (continued)
ILLUSTRATIVE EXAMPLE OF PEST ANALYSIS (CONTINUED)
TECHNOLOGICAL
SOCIAL (and demographic)

Factor
Impact on us
Potential actions and initiatives
Unmet local NHS
demand for key
specialist
services

Many of the growth areas coincide
with current specialties that could be
expanded (i.e. cardiac surgery,
cardiology, oncology)


Influence the reconfiguration of local
service delivery
Increase capacity in these
specialties through combination of
measures (see below)
High birth and
infant mortality
rates

Opportunity to expand maternity unit
and increase number of specialist
neo-natal cots

Invest in the maternity unit
Population
expansion over
next 10 years
following local
regeneration
programme

May lead to capacity overload if not
controlled

Close joint planning with PCTs to
ensure workload projections are
robust and capacity can be
increased in advance
Developments in
surgery are
reducing time in
hospital

Potential to significantly increase the
proportion of procedures performed
in daycase setting

Revise protocols and pathways to
increase daycase rate/inpatient rate
to 65/35 by 2010
Greater use of
remote
consultations and
home monitoring
for patients

Further potential to move the
delivery of care out of hospital and
closer to patients’ homes

Transfer of appropriate services
from outpatients to remote setting

Flex capacity plans for projected
reduction in activity

Explore potential for partnership with
technology supplier
32
Don’t worry about what point goes in what box; just concentrate on
capturing all the issues and thinking about what each factor means for
you


in other words, run the “So What?” test against each point
The example has been included to help steer your thoughts and develop
the rationale behind your plans. When populated whoever is responsible
for writing your Business Plan document can use it as a guide

the completed template needs to be included as an integral part of
Business Plan
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
33
Services
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
SERVICES
1.
Executive Summary
Service Development Plans
2.
Profile
5.1.1
Internal capability assessment / SWOT analysis
3.
Strategy
5.1.2
Commentary on SWOT analysis
4.
Market assessment
5.
Services
6.
Finance
7.
Risk
8.
Leadership & Workforce
5
-
Building on strengths
-
Addressing weaknesses
- Exploiting opportunities
5.1.3
Summary of future initiatives
5.1.4
Summary of activity projections
5.1.5
Resource implication of activity plans
9. Governance
The ‘Service Development Plans’ section of your Business Plan

This section of your Business Plan should set out how your services will develop over the next five
years, in response to

your stakeholder needs (incorporated within your vision)

your analysis of the external environment (your PEST analyses)

your internal capability assessment (your key strengths and weaknesses)

the opportunities and threats you have identified (the rest of your SWOT analyses)

The analysis recommended in this section of the Sourcebook has been geared towards helping
you set out a clear rationale to underpin your service plans. This is the section of your Business
Plan where you document that rationale

Against the main initiatives you choose to include you should also summarise at a high level the
associated costs and benefits (i.e. that your initiatives are viable), the timescales, the key risks and
mitigating actions and other operational implications

You should demonstrate that adequate consultation has taken place and your key stakeholders are
engaged and on board

Note:
This example storyboard is not an attempt to order each of the Business Plan assessment criteria within the
framework of a document.. Please refer to appendix 2 for the self assessment check list.
specifically demonstrate that your plans are compatible with your commissioners

It is critical that any assumptions you make in this section are explicitly stated and consistent with
the numbers and narrative throughout the rest of your Business Plan

What follows is specific guidance around how to derive the most benefit out of the SWOT analysis
tool, and how you might document key strategic initiatives in your Business Plan

No specific guidance has been included in this Business Plan around the production of detailed
activity, capacity and workforce plans, which are deemed to be core skills within NHS trusts
34
Services
An introduction to development plans
SERVICES: “How these will change”

The aim of your Business Plan is to link your activity forecasts and service plans to your financial projections and for those plans to be driven by a thorough understanding of your
external environment and internal capabilities

This key section therefore concerns the need for you:


to demonstrate a thorough understanding of the external environment in which you operate (market assessment)

to perform a robust internal assessment and to articulate what the combination of both means for your future services (service development plans)
You should then be able to demonstrate clearly in your Business Plan that your service development plans:

are in line with issues, trends and developments at both the local and national level

ideally leverage relative strengths or address relative weaknesses, and that they are deliverable

The exercises and templates which follow have been designed as a process to help you achieve this. For example the SWOT template will force you to explicitly state what a particular
strength means for your trust’s future direction. Similarly, the PEST template will force you to consider how a particular issue, such as peculiar local demographics, might impact on
your Trust. This is often referred to as the “So What?” test. The challenge is to justify each major initiative that your are proposing with sound, evidence-based strategic rationale

It is good practice, regardless of industry or geography, to design your future strategy with these basic rules in mind. Follow them properly and you will be better placed to defend your
Business Plan when it is challenged by stakeholders. Ignore them, and your Business Plan may lack coherence

Consider these exercises as an integral part of the process of developing your Business Plan and not a bolt on. Just because the detail may end up in an appendix does not mean you
should treat the exercises as an afterthought. Indeed, many of the Business Plans in the early waves were criticised for including SWOT and PEST analyses that did not seem to link
into longer term plans

Throughout this process you will need to liaise with your commissioners and SHA. They should ultimately support the activity projections you determine. This may be a difficult
exercise, as acknowledged by earlier NHSFT applicants, but it will ultimately produce fruitful dialogue

It is also important that you provide evidence for the key assertions that you make, for example by referencing to performance benchmarking analysis or third party reports
Feedback from
early waves
“Getting a handle on
capacity and activity in the
Trust and projecting this
forward five years was the
most difficult part of our
Business Plan. We had not
had to do this before”
35
Services
Analysing internal strengths and weaknesses
Internal strengths and weaknesses
EXTRACT FROM SWOT ANALYSIS (CONTINUED)
Key
Supporting evidence
Impact (So what?)
Low reference costs in several
specialties (Cardiac, Cardiology,
Oncology, Neo-natal)

Published annual DH statistic

Shorter inpatient lengths of stay
in target specialties

Benchmarked against national
peer group
Good clinical outcomes in target
specialties

Healthcare Commission
ratings
Dedicated team of staff with
strong clinical/financial/executive
ties

Low vacancy rates
Low sickness rates
Low staff turnover

Brainstorming your trust’s relative strengths and
weaknesses is the first step in performing a SWOT
analysis. But as with the PEST analysis, going that
extra step and asking what each finding means for
your Trust (i.e. the “So What?” test) is where this
exercise will deliver benefits to your Business Plan

Performing a robust assessment of your internal
capabilities will help you demonstrate how your future
plans might leverage key strengths or address key
weaknesses

In a competitive environment it is more informative to
think of strengths and weaknesses in relation to other
providers. This is where any benchmarking evidence
you can collect from the public domain is best put to
use

Try to support each point with evidence. This will not
always be possible, however in general you will be
better placed to defend your strategy if you have a
sound base of evidence to support the conclusions
upon which it is based

The example has been included to help steer your
thoughts. When populated whoever is responsible for
writing your Business Plan document can use it as a
guide
Potential initiative (how we will
build on this)
Key strength



Opportunity to leverage
competitive advantage and
increase volumes in more
specialist areas
Initiatives to increase volumes in
these specialties in future

Local service reconfiguration

Satellite outpatient clinics

Marketing initiatives

Investment required to increase
capacity
Staff are bought into ‘corporate
objectives’ and open to new
ways of working
Redesign patient care pathways to:

facilitate move to higher daycase
rates

free capacity

address bottlenecks

roll out satellite outpatient clinics
Key weakness
Land-locked sites and capacity
constraints in following areas:

ITU beds

outpatient clinic

diagnostics

radiotherapy (linacs)

in patient beds

other

other
Poor MIT systems in need of
investment



Existing capacity and activity
plans
Bed audits
Recent consulting report




Longstanding difficulties in
securing desired management
and operating information



Patient transport/ accessibility
issues

Patient complaints
Severe staff and patient parking
problem

Staff, patient, and local
resident complaints

Critical growth blockage given
we are not constrained by
demand, and funds should be
available
Principal driver of patient
complaints
Detrimental to staff job
satisfaction
Constraints addressed through
combination of:

transfer of appropriate services
to community setting through
local LIFT initiative

shift to higher daycase rates

internal redevelopment of
existing facilities

investment in diagnostics
capacity

network of satellite outpatient
clinics
Poor activity coding may
undermine ability to secure
reimbursement
Systems will not support future
processes
Frustrating for staff

Potential to impact volumes
under patient choice

Network of satellite outpatient
clinics

Invest in multi-story car park on
existing site

Joint procurement of new MIT
system with neighbouring acute
Trust
Outsourcing of IT implementation
and support
36

the completed template needs to be an integral
part of your Business Plan
Feedback from
early waves
“Thinking about the next step,
“the so-what”, was a major
breakthrough in the organisation.
The local business school
facilitated some sessions back in
the hospital involving a wide
tranche of employees. This
produced a very rich SWOT and
got a critical mass of key people
involved in the application
process.”
Services
Identifying key opportunities and threats
Opportunities and Threats
EXTRACT FROM SWOT ANALYSIS (CONTINUED)
Key
Validation (link to environmental
factors, strengths or weaknesses)
Potential initiative (hove we can
exploit this)
Likely net benefits



Once you have analysed the external environment and
considered your key internal strengths and
weaknesses, you will be in a position to develop a list
of opportunities and threats and complete your SWOT

In many cases you will be able to validate each point
by making reference to strengths, weaknesses or
external factors you will have highlighted previously

In this template the “So What?” challenge is to align
existing and future initiatives to opportunities and
threats
Opportunity
Increase activity in more specialist 
areas (i.e. cardiac, cardiology,

oncology, neo-natal services)
Potential to share clinical and
back office support services with
neighbouring acute NHS Trust

Save costs and release capacity
by moving more activity to a
daycase setting




Growing unmet demand in NHS
Strong track record in these
specialties

Influence the reconfiguration of
local service delivery
Joint venture with private
operator to establish a network
of satellite outpatient clinics


Existing facilities underutilised in 
both sites
Financial deficit in wider local
health economy
Rationalise pharmacy and
pathology facilities and staff to
address duplication

National trend and one of the 10 
high impact changes
Opportunity given current
specialties
Would address capacity
constraints and leverage flexible
staff attitudes
Increase capacity of daycase
unit, redesign pathways and
move daycase rates to 65/35 by
2010


Joint procurement of new MIT
system with neighbouring acute
Trust
Outsourcing of IT
implementation and support

Ensure financial model is based
on conservative estimates
Focus on development of more
specialist work
Address parking problem
Satellite clinics
Performance improvement
plans for weaker directorates



Enhanced financial prospects
(growth and profitability)
Better work experience for our
staff
Virtuous circle; as reputation
grows, easier to attract and
retain staff
Reduced clinical and back office
support costs across the patch
A good vehicle to promote
closer working in other areas
Lower cost of procedures
Enhanced patient experience as
patients spend less time in
hospital


Then summarise the high level benefits case of each
initiative

when you are writing your document it will be
informative to summarise the high level benefits
case against each key initiative you describe

this would be a brief summary of the associated
financial and non-financial costs and benefits

at this stage they may not yet be quantified,
however you should still be in a position to point
towards the source of those costs and benefits
Threat
Commitment to delivering
Electronic Patient Records

Part of national agenda, made
more complicated by weakness
of existing systems

Loss of volumes in new
environment of patient choice
Higher national decontamination
standards


A failure to address our parking
and patient access problems
offsets our strong track record in
waiting times and clinical
outcomes, particularly in
specialties where we have less
of a competitive advantage

Existing facilities will not remain
compliant without investment in
the next 12 months







Outsource CSSD services and

procure jointly with neighbouring 
acute Trust
37
Costs of substantial MIT
implementation project
minimised
Strengthen competitive
advantage
Widen catchment area
Reduce exposure to risk in
activity projections
Avoid high costs of investment
Able to secure a better deal
ask yourself, “How can we exploit this
opportunity?” or, “How should we manage this
threat?”
Feedback from
early waves
“SWOT is a robust analysis,
you can’t go wrong with
that.”
Services
SWOT: an alternative approach
Evaluating the effectiveness of internal directorates
DIRECTORATE ASSESSMENT TOPICS
Competitive position

Who are our
competitors?

What is the basis
of competition?

How do we
perform versus
other healthcare
providers?

How do our costs
compare with tariff,
and against our
‘competitors’?
Strengths and
weaknesses
Operational
effectiveness
Opportunities
and strategy

What are the
internal
strengths and
weaknesses of
the
directorate?


How do they
help or
constrain its
performance



What are our
major
opportunities to
improve
operational
effectiveness
What risks
must we
mitigate/manag
e?

What are we
doing to
exploit/change
these?
38
Which
services,
patient
segments, and
markets offer
the greatest
opportunities?
What is the
strategy to
most profitably
serve those
patients and
markets?

You will probably have a shortlist of clinical
specialties/directorates that you intend to develop over
the next five years

A series of directorate-level assessments may enable
you to consider market issues, your competitive
position, strengths and weakness, operational issues
and future opportunities at a more useful level

You could simply use the PEST and SWOT templates
already provided. Alternatively you might like to try
this framework and see if it is useful

it is essentially a series of questions that could be
used to prompt discussion and help draw out the
issues and initiatives to be included in your
Business Plan
Services
Short listing and documenting key initiatives in your Business Plan
Your Activity plans should be supported by a shortlist of planned and ongoing
initiatives
Transfer of
services to
community
settings
Reconfiguration
of local services
Revision of
protocols and
care pathways
Workforce
initiatives
Joint working
groups
(demand and
capacity
management)

Following the results of your SWOT and PEST analyses, and in consultation with your
commissioners you will need to agree your activity plans for the next five years,
achieving consensus wherever possible

Your Business Plan should then set out a shortlist of the key initiatives that, taken
together, will enable you to deliver this activity

do not include every initiative in your Business Plan, only those that have the most
impact

determining which to leave out (so that your document remains of a manageable
size) will be a subjective exercise

if you have PFI plans in the pipeline, do integrate these into your Business Plan as
this gives the reader a greater understanding of your Trust’s profile and intentions
Development of
neo-natal unit
New cardiac
floor
ACTIVITY PLAN
Rationalisation
of clinical
support services
Remote patient
monitoring
(Partnership
with technology
provider)
Documenting key initiatives in your Business Plan

New diagnostic
unit
New car park
Satellite
outpatient
clinics
(Joint Venture)
MIT system
(joint
procurement)
39
Some of these initiatives will already be underway and be supported by detailed
business plans

do not include every detail of those plans

but do make sure that the headlines you do include are consistent and that the links
to those plans are explicit

this way, the individuals responsible for delivering detailed plans can see where their
actions fit within the wider strategic context of your Trust
Services
Short listing and documenting key initiatives in your Business Plan (continued)
Documenting key initiatives in your Business Plan
EXAMPLE INITIATIVE: RECONFIGURATION OF LOCAL SERVICE DELIVERY
Suggested content
Example points to incorporate
The ‘driver’ (the
link to
environmental
factors, strengths
or weaknesses)





The high level
benefits case
Timescales
Key risks and how
they will be
managed
Central theme of LDP is the need to address duplication across local providers
Studies have identified a shortfall in NHS supply of specialist oncology, cardiac
surgery, cardiology, and neo-natal services in region
The Trust has strong track record in these specialties
Proposed reconfiguration involves focusing above services on our site and
moving neurosurgery to neighbouring acute Trust
Broad agreement reached with local stakeholders in principle

You should document key initiatives in such as way that you demonstrate
you have analysed your market and your organisation, and that you know
what factors (external and internal) will impact on your business over the
next five years

By supporting your key initiatives with sound rationale, you will make
your Business Plan appear far more ‘joined up’

As a guide, in addition to being aligned to your strategic objectives your
initiatives should either:


build on proven strengths

address perceived weaknesses

exploit opportunities that have been validated

manage threats
Preliminary business case approved by SHA
 Proposed savings of £20 million per annum across the patch in staff and
facilities costs
 Extra 23,000 daycase spells, 20,000 inpatient spells performed on-site by 2010
 Enhanced specialist reputation

This has been described as the ‘driver’ behind the initiative


You might also summarise
Construction and refurbishment commences early 2006
 Relocation scheduled for early 2007
 Fully operational by 2008

Public resistance: Communications managed centrally to control local authority
and press reaction
 Planning risk: Joint working groups established involving senior clinical teams
 Capacity: contingent on receipt of funds from SHA and NHSFF to develop
facilities and improve parking
High level
operational, HR,
governance and
financial
implications

Link to more
detailed plans

300 additional staff on site
2 new operating theatres, 2 new cath labs, 2 new linacs, 10 new high
dependency cots, 10 ITU beds
 Outpatient clinics require expansion (see satellite clinic initiative)
 Pharmacy and pathology capacity increased, but pathology to be moved off-site

Reconfiguration of local service delivery – May 2005
 Clinical support rationalisation - July 2005
40

the high level benefits case as described above, but fleshed out to
include specific associated costs and benefits

an indication of the timescales involved

the key risks associated with each initiative and how you propose to
manage them

the high level operational, HR, governance and financial highlights
from the more detailed plans

explicit links to those more detailed plans

This example takes one of the initiatives identified in the earlier
illustrations and sets out a flavour of the key points that could be
incorporated in your Business Plan

Ensure your narrative around the strategic initiatives you choose to
include is consistent with your financial projections and activity, capacity
and resource plans

The next step is to set out the financial projections that will test the
validity and viability of future service provision
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
41
Finance
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
6
FINANCIAL EVALUATION
6
Financial plans
6.1.1
Historical performance analysis
6.1.2
Income and expenditure 5 year projections (to reflect Service
Development Plans)
1.
Executive Summary
2.
Profile
3.
Strategy
4.
Market assessment
6.1.3
Cash flow 5 year projections, with commentary on key assumptions
6.1.4
Balance Sheet 5 year projections
5.
Services
6.1.5
PFI analysis (if applicable)
6.
Finance
7.
Risk
8.
Leadership & Workforce
9.
Governance
Note:
This example storyboard is not an attempt to order each of the Business Plan assessment criteria within the
framework of a document. Please refer to appendix 2 for the self assessment check list.
The “Financial Evaluation” section of your Business Plan
 The main purpose of financial evaluation is to establish and measure the viability of your
service development plan and the cash resources you will need to survive over the next
five years
 Your activity assumptions, capacity plans, staffing and resource requirements, and
financial projections should all hang together. Performance will also need to be
underpinned by a clear capital programme
 Five year balance sheets and cash flow projections will demonstrate that your Trust will
remain financially viable over the period
 You will have made many assumptions along the way. It is critical that you realise where
you have made assumptions, that you document them clearly, and that you ensure the
projections and associated commentary are consistent
 This section focuses on providing guidance to address areas where both Monitor and the
NHS Financing Facility commented that standards were lacking in the Business Plan
documents that they reviewed
 consequently the following slides focus on methods to support the clear
communication of complicated financial information and on high level advice to
underpin the construction of your financial models
42
Finance
An introduction to the finance section
FINANCE: “How the money stacks up”

Your Business Plan document needs to be underpinned by an integrated financial model that incorporates detailed income and expenditure, balance sheet and cash flow projections.
This model should dovetail neatly and explicitly with your activity, capacity and resource plans

Feedback from early waves suggests that this is usually the most challenging aspect of the application and that applicants would have appreciated earlier warning of the levels of rigour
demanded by Monitor. In turn, Monitor has commented that levels of modelling rigour need to improve within applicants. In particular:


inconsistencies have often existed between different elements of the same application, leading to financial and operating projections that ‘don’t make sense’

many applicants have struggled to deal with the uncertainty surrounding what ‘inputs’ to use or assumptions to make

the underlying financial position (ignoring one-off and non-recurring items) has not always been transparent

the drivers of enhanced financial performance over the period of the projections are often unclear

too often, applicants failed to clearly link historic financial and operating performance to projected performance in their documents
Early NHS Foundation Trusts have commented that finance team resources are often the most stretched by the application process, particularly as applications progress and Monitor
becomes involved. An honest and early assessment of the capabilities of your finance team is recommended
Feedback from
early waves
“The financial modelling was
technically complex. Our
finance team had no modelling
experience. We had
management accountants and
financial accountants but noone in the middle that could link
operating and financial info and
build a model that produced the
outputs Monitor was requiring.”
43
Feedback from
early waves
“The most difficult part of the
Business Plan process was
balancing the different models.
Such an enormous amount of
numbers go in. You can’t
underestimate the number
crunching needed to get
assurance that the plans were
robust.”
Feedback from
early waves
“The financial modelling and remodelling were the most difficult
part of producing our Business
Plan. We spent hundreds of
hours on this.”
Finance
Linking historical to projected financial performance
Ensure your Business Plan document clearly sets out your underlying financial
track record, without any one-off or non-recurring items
Underlying financial performance
Financial year
£millions
Surplus reported in annual accounts
Actual
2002/03
Actual
2003/04
Actual
2004/05
-
-
0.2

Both DH and Monitor will want to see the ‘financial starting point’ for the development
of your plans and associated projections as a NHS Foundation Trust

Experience of the early waves of applicants has shown that it is frequently difficult to
establish this baseline position, particularly if historic financial performance has been
distorted by one-off items such as capital to revenue transfers or asset disposals that
are not separately analysed

Without a clear picture of underlying financial performance it will be difficult to clearly
articulate the benefits of becoming a NHS Foundation Trust
Less: One-off, non-recurring items
VAT reclaim
Capital to revenue transfer
Sale of land and buildings
0.4
-
0.4
1.1
0.8
Adjustment to accounting policies
0.5
Support package
Underlying deficit
0.5
(1.5)
(0.4)
(1.6)
Feedback from the NHS
Financing Facility
“A key area for us is getting
under the skin of the
numbers. I’d like to see
more clarity around
underlying performance (e.g.
by stripping out the effect of
non-recurring items). This is
an area I have spent a lot of
time getting to grips with"
44
Monitor Feedback
“It would be helpful to get a
clearer understanding of
what the underlying financial
position is, after exceptional
and one-off items have been
stripped out. It is not always
easy to see this"
Finance
Linking historical financial performance to projected performance (continued)
Compare your financial track record to projections as if you were to gain NHS Foundation Trust status but also as if you were to remain an NHS Trust

However this does not mean that you need to produce two sets of projections in your Business Plan document

The rationale behind this exercise is to enable you to articulate the financial benefit to your becoming an NHS Foundation Trust, in addition to less tangible benefits in other areas. You
will need to supplement this with clear messages around what you will be doing differently in the future to deliver this enhanced performance
Income and Expenditure surplus/ (deficit)
Overview of financial performance
5.0
TRACK RECORD
As an NHS Foundation Trust
 Your enhanced projections will illustrate the financial effect of what you will do differently
as an NHS Foundation Trust
 These projections will include any additional costs of your becoming a NHS Foundation
Trust (e.g. the cost of changes to internal systems and processes), in addition to any
financial benefits
PROJECTIONS
4.0
3.0
2.0
£m
'Baseline' projections
 You need to set out what you feel would be achievable if you were to remain an NHS
Trust
 Establishing a robust baseline will enable you to articulate what becoming an NHS
Foundation Trust will mean for you
 Your 'vision' is likely to remain the same under each scenario
1.0
0.0
(1.0)
Underlying surplus/(deficit)
Aspiring NHS FT projections
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
(2.0)
Baseline projections
45
Finance
Linking historical financial performance to projected performance (continued)
Linking operational and financial metrics will help illustrate that your strategy is deliverable

The same guidance applies to operating information. Tie historic operating performance and projected operating performance together in the same place

Additionally, if you set out how financial performance will develop alongside the key ‘drivers’ of that performance (e.g. average lengths of patient stay or staff ratios) your document will
appear more ‘joined up’ and you will have greater comfort that your strategy is ‘do-able’
Feedback from the
NHS
Financing Facility
“There tends to be not
enough around the
historic numbers. I
would want to see
trends over the past
three years and, as
importantly, a clearer
link between historics
and projections”
46
Finance
The use of performance ‘bridges’

The use of ‘bridges’ or ‘waterfall charts’, whether they
are in graphical or tabular form, are a useful method of
communicating changes in a key area over the course
of your projections. When supplemented by narrative
they communicate clearly to the users of your
Business Plan document how you plan to get from “a”
to “b”

This technique usually supplements the more classic
presentation of Income and Expenditure accounts.
We have set out above an example of how a potential
NHS Foundation Trust might illustrate how it expects
to generate an additional £27million of income in two
years

If you take this approach, be sure to include the
source of the data used in your illustrations
Monitor Feedback
“Assumptions around the
base case are often unclear,
as are the ‘sources’ of
growth or increased
profitability through the
period of the projections.
We are left asking, “Where is
this enhanced performance
coming from?”
47
Finance
The use of performance ‘bridges’ (continued)
48

The same approach can be used to illustrate cost
pressures over the period

You may also wish to use a performance bridge to set
out

how your results might differ between your
‘basecase’ projections (as a NHS Trust) and your
‘NHSFT’ projections

how profitability is projected to improve between
the latest actual results and year five
Finance
Financial modelling
The importance of sound activity plans

The diagram on the next page illustrates the approach to producing an integrated financial model (on the right) from the various low level assumptions (e.g. number of spells per period
and tariffs, by HRG) on the left

Note how critical the activity assumptions are to the whole process. Activity plans drive your capacity plan (e.g. beds, facilities etc) and resource plan (e.g. headcount) which in turn
determine the cost base of your organisation. Under PbR, activity is clearly also the prime driver of revenue, with productivity and innovation providing the scope to improve margins

Ensure your activity plans have been informed by the strategic direction that is set out in your Business Plan. The sooner you start the consultation process with commissioners, the
sooner differences can be resolved and the sooner your Board can sign off the long term activity plan

Once this has happened the financial planning process can move forwards with far greater certainty. Without it, constantly changing activity projections will frustrate the financial
planning team and complicate the process
Feedback from early
waves
“We had PCTs telling us
they had not looked at what
we had sent because it was
too complicated…With the
benefit of hindsight we would
engage with the PCTs much
earlier and probably be
clearer as to what was going
on in year one and be less
specific as you got up to
year five."
49
Feedback from early
waves
“You need to be clear about
the gritty issues that need to
be tackled early. Drawing a
line underneath activity plans
and getting them signed off
by the Board enables
everything to move on"
Finance
Financial modelling: a high level overview of the process
'Prices'
PCT contract
configuration
Market Forces Factor
Activity planning
Historic activity
trends in healthcare
community
Number of spells, by
HRG, performed
each period
New market factors
(e.g. patients choice,
ISTCs)
Average historic
consumption of
drugs and other
clinical supplies
Board view of
Activity for the next
five years
Cost of
consumables
Efficiency and inflation assumptions
National tariffs and
PbR
Revenue
Variable costs
Staff numbers (by
type/grade)
Consultation with
commissioners
People costs
Fixed costs
Salaries
Existing capacity
(beds, staff, average
ratios per patient)
Productivity,
capacity and
resource plans
Buildings, wards,
beds, equipment
Capex and
funding plans
50
Five year I&E,
Balance Sheet
and Cash Flow
Statements
Finance
Financial modelling: high level guidance
High level guidance when modelling for your NHS Foundation Trust application
Design your model to enable sensitivity analysis to reflect the potential impact on
results of the most important risks identified in your Business Plan paper


Coordinate the activity, capacity, resource and financial plans from one place

If your model is built from the bottom up, and is driven by assumptions around the
main business drivers (e.g. activity levels, staff numbers, salary levels, PbR roll out
and tariffs, inflation etc) then it should be relatively easy to assess your exposure to
the different risks you have identified
The financial projections are not an exercise for the Finance Department alone. They
must inform, and be informed by, the issues being considered in the Business Plan
paper otherwise your document will appear disjointed
Clearly articulate your assumptions and supporting rationale
−
for example, if revenues and consumables costs are properly based on expected
activity levels then it should be possible to model the impact of a decrease in
activity levels (under patient choice) on margins
−
another example: if you have modelled cost inflation (drugs, other consumables,
salaries) separately to projected uplifts in the national tariff, then it will be possible
to demonstrate the impact on margin if the tariff is not updated

The modelling diagram sets out many of the areas in which you will need to make
working assumptions. Have a process for documenting these assumptions centrally,
and for sharing them between your team

Furthermore, set out the rationale that supports your assumptions. As circumstances
change and you update your assumptions, update your rationale too
If you ‘lump’ your assumptions together (for example, by failing to model costs to an
appropriate level of detail), it may undermine your ability to measure the financial
impact of some key risks that you have identified
Monitor Feedback
“Applicants have to contend
with changing external
factors (e.g. PbR roll out). I
would like to see more of
them making some
assumptions, running a few
different scenarios and
moving on”
51
Feedback from the NHS
Financing Facility
“You often get the
impression that HR has
written a bit, and Finance
has written another bit. This
approach can produce some
funny results"
Feedback from early
waves
"Bring activity, capacity,
costs and income all under
one roof. This is difficult to
do but worth it"
Finance
Financial modelling: high level guidance (continued) – this section is still under development
Sense checking the outputs of your financial model

If the process of pulling together your Business Plan is truly integrated, then market, operational, clinical and financial metrics will all be aligned

In its review of your Business Plan document and financial model, Monitor will use ratio analyses (amongst other methods) to establish whether the outputs of your model make sense

In the next draft of this Business Plan, Monitor will supply examples of the indicators that it uses when performing these tests. These examples will provide suggestions to future applicants as to how they
might go about testing the outputs of their own models in advance of the Monitor phase of assessment
Key Assumptions – Activity & Inflation

Activity
Elective
 Non-elective
 Outpatients
 A&E
 Other
 Activity Growth
 Elective
 Non-elective
 Outpatient
 A&E
 other
 Inflation-Base Case
 Tariff inflation
 Non-tariff inflation
 Non NHS clinical income inflation
 Education & Training
 Research & Development
 Other income
 Pay cost
 Drug cost
 Clinical Supplies & services
 Other Costs
 Unitary Charge
 Capex

Operational KPIs
Cost KPIs excluding service
development
Average length of stay (Elective)
Non Agency
Average length of stay (exc Day Cases)
Consultant Costs
Average length of stay (Non-Elective)
Junior medical costs
Bed occupancy
Nursing, midwifery, health visitors costs
Theatre Utilisation
Dental costs
Day case percentage (day cases/spells)
Scientific, therapeutic, technical costs
New to follow up outpatient ratio
Other clinical staff casts
Number of consultant PA session per week
Total
Number of beds
 Agency - as above
Local population
Average number of staff – non agency (wte)
As above
Average number of staff – non agency
(growth%) - as above
Average Salary – as above
Agency cost proportion – as above
Total income/number of non agency staff – as
above
Other
Total pay cost
Total agency cost as %of total pay cost
Staff cast per bed – as above
National Cost pressure
Consultant contracts
EWTD
Agenda for change
Pension Superannuation
Other national cost pressure
52
Monitor Feedback
“They need to do more ratio
analyses internally in order
to sense check the outputs
of their models. We have
KPIs that we use to do this
(e.g. around capacity, bed
numbers, length of stay etc).
They need to be thinking like
this before they get to us"
Finance
Financial modelling: high level guidance (continued) – this section is still under development
Sense checking the outputs of your financial model
Other KPIs
High Level Marginal Cost
Cost KPIs excluding service
Analysis for additional activity development
Clinical Income KPIs
 High level efficiency levels
High level Marginal Cost Analysis
National Cost pressure – (cont.)
Clinical Income per bed





Pay costs per spell
 Drug costs per spell
 Clinical supplies and
service costs per spell
 Other costs per spells
 Total costs per spell
Income growth (REAL)
 NHS clinical income
 Education & Training
 Research & development
 Other income
 Total income
Costs growth (REAL)
 Pay costs per spell
 Drug costs per spell
 Clinical supplies and
service costs per spell
 Other costs per spells
 Total costs per spell
Capex
 Maintaining Capex/dern
change
Activity per (100) population
 Elective
 Non-elective
 Outpatient
 A&E
 Other
Income growth from additional
Consultant Costs/consultant costs
(non agency)
A4C/total pay exc medical & Agency
Drug cost growth from additional
activity
EWTD/Jr Meds cost (non agency)
Clinical supplies and service
Pension superannuation/total pay
growth from additional activity
costs
Other costs
Other national cost pressure/total
pay cost
Implied high level marginal cost
Drug Costs
Drug costs
Activity growth
Development
NICE guidance
Other – (please specify)
Clinical supplies costs
Clinical supplies costs
Activity growth
Other – (please specify)
Other – (please specify)
Staff cost growth
Monitor Feedback
“They need to do more ratio
analyses internally in order
to sense check the outputs
of their models. We have
KPIs that we use to do this
(e.g. around capacity, bed
numbers, length of stay etc).
They need to be thinking like
this before they get to us"
NB: for more detail please refer to O_KPI in the Monitor’s Integrated Financial Model
53
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
54
Risk
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
7
RISK
7.1.1
Summary of key business risks
- strategic,
1.
Executive Summary
2.
Profile
3.
Strategy
4.
Market assessment
5.
Services
6.
Finance
7.
Risk
8.
Leadership & Workforce
9.
Governance
- operational,
- finance,
- IT,
- HR
7.1.2
Commentary on mitigation
7.1.3
Sensitivity analysis
Note:
This example storyboard is not an attempt to order each of the Business Plan assessment criteria within the
framework of a document. Please refer to appendix 2 for self assessment check list.
The “Risk” section of your Business Plan
 You will have made many assumptions along the way and identified key risks inherent to
your strategy. It is critical that you realise where you have made assumptions, that you
document them clearly, and that you understand the potential for those assumptions to
be ‘inaccurate’
 Scenario analysis is the way to flex those assumptions and assess the resulting financial
impact on your Trust. Ensure the scenarios you run are linked to the key risks that you
have identified
 Your scenarios could include a growth (best) case, a base (most likely) case, and a
sensitised (downside) case. These will be ‘combined’ sensitivities that model the impact
of several risks at once
 you may also wish to model the effect of individual risks to illustrate how sensitive
your model is to different inputs
 Where these sensitivities push your projections close to key thresholds, such as
borrowing limits, set out your contingency arrangements
 Doing this will enable you to demonstrate that you are in control of the key risks inherent
in your strategy
55
Risk
An introduction to risk
RISK: “What could go wrong and how you will mitigate against this”

Throughout the development of your strategy and activity plans, you will have considered the key risks at each stage, and whether or not you can manage these risks

Best practice business planning involves a continuing assessment of the key risks that impact your organisation, and the development of ‘risk treatment’ plans to manage these risks

This section reaffirms the purpose of Corporate Risk Registers to help manage this process on an ongoing basis

The running of different sensitivities through your financial model, each of which should be aligned to the key risks that you have identified, is called “scenario analysis” or “stress
testing”

The intention is to assess how sensitive your projected results are to changing circumstances, but also to establish where your ‘base case’ model sits in relation to the range of possible
outcomes

The exercise is also designed to illustrate where “pinch points” might arise; in other words where key financial thresholds, such as borrowing limits, might be at risk of breach. In such
circumstances you should set out contingency arrangements or corrective actions that you could take

To date, applicants have often successfully discussed key risks and how they will mitigate against them, however many have failed to go to the next step and estimate the potential
financial impact of those risks

This last step is essential if you are to demonstrate to DH and Monitor that you are in control of the key risks inherent in your strategy
Feedback from early
waves
“With the benefit of hindsight
we would be a lot harder on
ourselves around financial
modelling. We would do the
sort of sensitivity tests that
Monitor do and perform
robust sensitivity analysis as
early as possible."
56
Feedback from early
waves“
I would suggest running the
modelling differently. I would
start the other way up and
do all the risk analysis first
and then the modelling to
meet the risks and then sort
the text afterwards."
Feedback from early
waves
“The degree of forecasting
and risk analysis was a
different way of looking at
things than we had been
used to. We were not used
to looking at the risks and
downsides coldly and then
laying them out."
Risk
The corporate risk register
Corporate risk register
Demonstrating that you are in control of the key risks inherent
in your strategy

Both DH and Monitor will need to see that you have identified the key risks associated
with your strategy

Each of the initiatives that you will have set out in your document will have associated
project risks. In addition, your SWOT and PEST analyses may have thrown up
additional risks that will need to be managed

Your Board will already maintain a corporate risk register. Your Business Plan project
manager should ensure that the key risks associated with the achievement of your
strategic objectives are reflected on that register
STEP1
Identify the key risks to the execution of your strategy
STEP 2
Clarify how ‘risk treatment plans’ will mitigate these key risks
and understand the ‘residual risk’ that remains
STEP 3
Develop a realistic set of scenarios to model the effect of those
risks that have the greatest financial impact
Scenario analyses
Identify the key risks to the execution of your strategy
Clarify how ‘risk treatment plans’ will mitigate these key risks and understand the
‘residual risk’ that remains

Both DH and Monitor will need to see that you have identified plans to mitigate against
the effect of key risks. These ‘risk treatment plans’ should also be documented on the
corporate risk register

An example of a corporate risk register, that quantifies and prioritises key risks, sets out
treatment plans and illustrates the extent to which ‘residual risk’ remains is illustrated on
the next page

Also included are guidelines to help you assess both the potential impact of each risk on
your Trust, and score the likelihood of the risk occurring. The product of the two (the
likely impact on your Trust) enables risks to be prioritised. For example, an ‘extreme
risk’ would require immediate action, whereas a ‘low risk’ might be managed by routine
procedures
STEP 4
Present a set of financial outcomes for growth, base, and
sensitised cases and compare to key financial thresholds
STEP 5
Where your sensitised case approaches key thresholds, clearly
set out your contingency arrangements
57
Risk
The corporate risk register (continued)
Illustrative example of a corporate risk register
Summary
description of risk
(associated with
Number strategy)
Risk
Likely
Impact
score impact to Summary of ‘risk
(1 to 5) ( P x S )
Trust treatment’ plan
Directorate
Likelihood
(1 to 5)
Surgical
4
5
20
Extreme Workshop
programme over
June/July to
understand
resistance and
design comms
strategy
Proposed
reconfiguration of
services may be
delayed by
press/public/staff
resistance
Cardio,
Oncology
Women &
Children
3
5
15
Extreme Stakeholder
communications
strategy developed
with local partners
Case mix may prove
unusual and
unsuitable for day
case work
Cardio,
Oncology
Women &
Children
2
4
8
1
Unable to achieve
the shift of
confidence in the
consultants to
persuade them to
shift to day surgery
setting
2
3
High
Joint working group
established to review
current and projected
activity
(preliminary findings
favourable)
Who is
responsible for
implementing
plan?
Medical Director
Director of
Corporate
Development
Medical Director
Source of review
(e.g. internal
audit)
Date of reevaluation
Residual risk
rating (after
treatment)
Trust Board
acceptance
of rating
Monthly
Board
meetings
30 Sep
High
Accepted
Bi-weekly report
to planning
committee
31 Aug
Moderate
Accepted
4 Jun
Low
Accepted
Report due for
June board
meeting
STEP1
STEP 2
STEP 3
STEP 4
STEP 5
58
Risk
The corporate risk register (continued)
IMPACT ON THE TRUST
Level
Impact
Detail description examples
1

Negligible – no obvious harm/superficial injuries; no service disruption; low
financial loss (less than £1000)
2

Low – first aid treatment; absent for work 1-3 days; minimal harm to patient;
increased level of care 1-7 days; adverse publicity unlikely; financial loss
less than £10,000
3
4
5
Note:



Likelihood
Moderate – medical intervention required; absent from work 4-14 days;
increased level of care 8-15 days; local adverse publicity possible; financial
loss £10,000 - £50,000
Severe – major injuries/major surgery/multiple minor surgeries/RIDDOR
reportable; absent from work over 15 days; increased level of care over 15
days; national adverse publicity; temporary service closure; financial loss
£50,000 - £250,000
Extreme – death; significant multiple injuries; permanent illness or disability;
extended service closure; protracted national adverse publicity; financial
loss over £250,000
A number (1-5) indicating the impact of the risk occurring
Key:
Source:
1
2
3
4
5
1
L
L
M
H
H
2
L
L
M
H
E
3
L
M
H
E
E
4
M
M
H
E
E
5
M
H
E
E
E
E
Extreme risk – immediate action required
H
High risk – senior management attention needed
M
Moderate risk – management responsibility must be specified
L
Low risk – manage by routine procedures
Appendix E (pp. 34-Standards) Australia. 1999. Risk Management AS/NZS 4360:1999.
Standards Association of Australia. Stratified NSW
:
LIKELIHOOD OF RISK CYSTALLISING
Level
Detail description examples
1

Rare – may occur only in exceptional circumstances
2

Unlikely – could occur at some time
3

Possible – might occur at some time
4

Likely – will probably occur in most circumstances
5

Almost certain – is expected to occur in most circumstances
STEP1
STEP 2
Note:
STEP 3
A number (1-5) indicating the likelihood of the risk occurring
STEP 4
STEP 5
59
Risk
Scenario analyses
Demonstrating that you are in control of the key risks inherent in your strategy:
Developing a realistic set of scenarios to model the effect of those risks that have the
greatest financial impact
Corporate risk register

STEP1
Identify the key risks to the execution of your strategy
STEP 2
Clarify how ‘risk treatment plans’ will mitigate these key risks
and understand the ‘residual risk’ that remains
Scenario analyses
STEP 3
Develop a realistic set of scenarios to model the effect of those
risks that have the greatest financial impact
STEP 4
Present a set of financial outcomes for growth, base, and
sensitised cases and compare to key financial thresholds
In building your financial model, you will have made a host of assumptions in many
areas, for example:

Volumes (e.g. inpatient, daycase, outpatient etc)

Capacity (e.g. bed days available, theatre sessions available etc)

Efficiency/productivity (e.g staff/patient ratios, machine throughput etc)

Tariffs

Unit costs (e.g. salaries by staff type, drugs costs, consumables costs)

Inflation (e.g. tariff uplifts, wage inflation, drug costs inflation etc)

Balance sheet (e.g. accounting policies, creditors days, debtors days etc)

Obviously, you will be more confident about your assumptions in some areas than you
are in others. This is the purpose of scenario analysis; to reflect the fact that the future is
uncertain, that each assumption is no more than an informed opinion within a range of
possible outcomes, and that the ‘range’ will be wider for some assumptions than others

For each assumption, log the best, worst and most likely outcomes. To do this you
should formally consider how the residual risks identified in your service strategy and
logged in your corporate risk register (i.e. the uncertainty that will remain after any
mitigating actions that you are planning) might effect your assumptions

The example on the next page looks at how future day case volumes might vary given
uncertainties around the degree of success and timing of planned strategic initiatives
Feedback from early
waves
“Early on, everybody wanted
answers from the DH on lots
of areas. By the end,
everyone realised that they
had to make assumptions.
This was a key learning
point."
STEP 5
Where your sensitised case approaches key thresholds, clearly
set out your contingency arrangements
60
Feedback from early
waves
“We were not used to
projecting five years ahead
and dealing with the level of
uncertainty involved. In our
world, assumptions go out of
date pretty quickly. In short,
we struggled to get a handle
on what assumptions we
should use."
Risk
Scenario analyses
Illustration: Daycase activity projections (a) – ‘steady state’
volumes
Key risks determining this range
1. Unable to achieve the shift of
confidence in the consultants to
persuade them to shift to day
surgery setting
2. Case mix may prove unusual and
not appropriate for daycase work
3. Delays in securing funds to expand
existing daycase unit
4. Uncertainty in population expansion
5. Impact of patient choice from 2006
43
41
39
Spells (000s)
37
35
33


base case
grow th case
sensitised case
27
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
2002/03
25
in this example the effect of additional daycase volumes from the
reconfiguration of services in the locality is separated from ‘steady state’
volumes in order to model the effect of a delay to the reconfiguration

Planning your modelling like this helps you to meet a key requirement;
directly linking the risks in your strategy to your financial projections

Perform a similar exercise for each major assumption. Dry run the different
inputs through your model and monitor how the key outputs change (e.g.
cash or borrowing headroom, break even point, profitability ratios, the PBL)

This will help you build a sense of the different scenarios you should
illustrate in your Business Plan

In summary, the scenarios you pick should be driven by those risks that
have the greatest impact on the key outputs of your model
31
29
Note how disaggregating your assumptions enables you to perform much
more informative scenario analyses
Illustration: Daycase activity projections (b) – activity transferred to Trust following
local service reconfiguration
25
Key risks determining range
1. Local reconfiguration of services has
yet to be finalised in detail
2. Implementation timetable only in draft
form
3. Threat of delays from public and
press resistance
4. SHA and NHSFF funding yet to be
authorised
15
10
STEP1
STEP 2
base case
grow th case
sensitised case
5
STEP 3
2009/10
2008/09
2007/08
2006/07
2005/06
2004/05
2003/04
0
2002/03
Sells (000s)
20
STEP 4
STEP 5
61
Risk
Scenario analyses
Illustration: Month end cash balances for growth, base and sensitised case financial model
base case
grow th case
sensitised case
w orking capital facility
10.0
8.0
6.0
£ millions
4.0
2.0
0.0
-2.0
-4.0
-6.0
M ar 2010
Jan 2010
Nov 2009
Sep 2009
Jul 2009
M ay 2009
M ar 2009
Jan 2009
Nov 2008
Sep 2008
Jul 2008
M ay 2008
M ar 2008
Jan 2008
Nov 2007
Sep 2007
Jul 2007
M ay 2007
M ar 2007
Jan 2007
Nov 2006
Sep 2006
Jul 2006
M ay 2006
M ar 2006
Jan 2006
Nov 2005
Sep 2005
Jul 2005
-8.0
Present a set of financial outcomes for growth, base, and sensitised cases and compare those outcomes to key financial thresholds

Your individual scenario analyses should culminate in a growth (best) case, a sensitised (downside) case, and a base (most likely) case. Presenting the outputs of each graphically
clearly illustrates:

the range of possible outcomes

where the base/most likely case sits within that range

how the sensitised/downside case compares to critical thresholds (e.g. working capital facilities, break even point, the public borrowing limit etc)
STEP1
STEP 2
STEP 3
STEP 4
STEP 5
62
Risk
Scenario analyses
Illustration: Month end cash balances for growth, base and sensitised case financial model
base case
grow th case
sensitised case
w orking capital facility
10.0
8.0
6.0
£ millions
4.0
2.0
0.0
-2.0
-4.0
-6.0
M ar 2010
Jan 2010
Nov 2009
Sep 2009
Jul 2009
M ay 2009
M ar 2009
Jan 2009
Nov 2008
Sep 2008
Jul 2008
M ay 2008
M ar 2008
Jan 2008
Nov 2007
Sep 2007
Jul 2007
M ay 2007
M ar 2007
Jan 2007
Nov 2006
Sep 2006
Jul 2006
M ay 2006
M ar 2006
Jan 2006
Nov 2005
Sep 2005
Jul 2005
-8.0
contingency arrangements
 The Trust would need to take corrective action to
ensure its financial budget is achieved and the
following actions have been identified by management:
 increasing CIPs
 allow creditors days to remain unchanged, rather
than decreasing them
 seeking additional activity to fill spare capacity
 reducing costs in the event of reduced activity
 The Trust could also influence its short-term cash
position by delaying its capital programme, as it has
£6.4 million of uncommitted capital expenditure (over
the life of the model)
Where your sensitised case approaches key thresholds, clearly set out your contingency arrangements

Where your sensitised case approaches key thresholds, you will need to articulate contingency arrangements or corrective actions that you might take


for example, these might include how you might manage a worsening cash position
This final step enables you to meet your key requirement; proving that the major risks inherent in your strategy are under control
STEP1
STEP 2
STEP 3
STEP 4
STEP 5
63
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
64
Leadership
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
8
LEADERSHIP & WORKFORCE
8.1.1
Management arrangements
8.1.2
Workforce KPIs
8.1.3
Agency and recruitment arrangements
8.1.4
Recruitment hotspots and actions to
8.1.5
Workforce and Organizational
Note:
address
development

8.1.5.1 Agenda for Change

8.1.5.2EWTD

8.1.5.3 Consultants contract

8.1.5.4 Relationship with unions
1.
Executive Summary
2.
Profile
3.
Strategy
4.
Market assessment
5.
Services
6.
Finance
7.
Risk
8.
Leadership & Workforce
The Leadership section of your Business Plan 9. Governance
 This section is intended to cover an overview of the leadership, the management
structure of the trust and its employees. It should provide the reader with a high level
understanding of how the trust board operates and its attitude towards its workforce

It is important that you set out why you believe your management team has the capacity
and capability necessary to move the organisation forward with assurance and how HR
issues are integrated within the organisations strategies

Outline plans for changes to high level systems, procedures, processes, and people if
your self assessment has identified obvious gaps that need to be addressed

your objective is to make it clear in your Business Plan document that you are taking
all the necessary steps to become ‘fit for purpose’ as a NHS Foundation Trust

what opportunity will be created for the workforce as a result of securing NHS
Foundation Trust status

It should provide an overview of the board structure together with the Executive and Non
Executive Director qualifications & experience

It needs to demonstrate how the organisation is maintaining & continuing to develop
excellent HR practices, drawing from the NHS and beyond; demonstrating that the
organisation will continue to meet legal requirements in HR and HR-related issues, and
demonstrating local HR capacity/capability to fulfil this, and how this will be done through
a duty of partnership.

It needs to show how the organisation developed it’s workforce/HR strategy, by involving
and engaging staff (and other partners/stakeholders) and where this involvement
informed and influenced the business plan, e.g. use of volunteers to assist in service
delivery, or recruitment/re-training opportunities.
This example storyboard is not an attempt to order each of the Business Plan assessment criteria within the
framework of a document. Please refer to appendix 2 for the self assessment check list.
65
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
66
Governance
Structuring your Business Plan
Potential structure for your Business Plan
EXAMPLE STORYBOARD
9
GOVERNANCE ARRANGEMENTS
1.
Executive Summary
2.
Profile
9.1.1
How stakeholder interests will be represented
3.
Strategy
9.1.2
Corporate governance & management
4.
Market assessment
9.1.3
Risk management
5.
Services
9.1.4
Performance management reporting framework
6.
Finance
9.1.5.
Financial controls and reporting
7.
Risk
9.1.6
Audit
8.
Leadership & Workforce
9.1.7
Compliance Framework
9.
Governance
9.1.8
IT systems
The “Governance” section of your Business Plan
Note:

Your Business Plan document will need to demonstrate that you have adequate
governance arrangements in place to cope with the additional pressures that operating
as an NHS Foundation Trust will bring

You should summarise only the key issues from the separate Governance paper that
you will have prepared as part of your submission

The following pages set out specific guidance around how you could go about:
This example storyboard is not an attempt to order each of the Business Plan assessment criteria within the
framework of a document. Please refer to appendix 2 for the self assessment check list.
67

assessing your board against a competency framework

assessing your Trust against a governance framework

deciding what improvements you need to make to your board reporting
Governance
An introduction to the governance arrangements section
GOVERNANCE: “How you will stay in control”

Not surprisingly, there is significant overlap between the governance, risk and finance fundamentals. Governance is about ‘staying in control’ of your business. The finance and risk
fundamentals are concerned with ensuring you have a sound grip on your financial position and predicting and planning for ‘what could go wrong’

This Business Plan Sourcebook has already set out the importance of defining and debating the top risks to your organisation, and reflecting these in your five year financial plans

This section focuses on three additional steps that will help you put appropriate systems and processes in place, and ensure your people have the right mix of skills to operate
effectively as a new NHS Foundation Trust. These steps are:

reassessing your Board competency framework then undertaking individual and Board assessments and implementing a development plan

self assessing against a governance framework

upgrading your board reporting

These activities will help you achieve greater clarity around where existing systems, processes and skills are appropriate, and more importantly where investment, redesign, training and
potentially recruitment is required

Devolution and decentralisation means NHS Foundation Trusts have greater independence but are more exposed. Monitor has high expectations of NHSFT Boards which must be
equipped to operate in a more complex and competitive environment where ‘modernisation’ is a central theme

Strong systems and processes, and the right people in your team, will be important as Monitor will assess you not only on what you say you will do, but also on how confident it is that
you can achieve your plans

This section of the Sourcebook complements the more detailed DH guidance contained in ‘A guide to developing governance arrangements’. As part of your application to become an
NHSFT you will be preparing a separate appendix in the Business Plan detailing the new constitution and membership structure you are implementing at your Trust. While you are
required to provide commentary and analysis in your Business Plan in relation to this, your Business Plan should not repeat the detailed information you will provide separately.
68
Governance
Setting a competency framework, assessing against it, and implementing a development plan
Clarity and agreement on
what is the role of the Board
as an FT
Undertake structured
interviews and assemble
portfolio of evidence against
the competencies
Clarity and agreement on the
competencies Board members
need to fulfil this role
2
1
3

The diagram illustrates the cycle of continually reassessing
the competencies required of your Board, assessing your
execs and non-execs against it, identifying skills gaps and
coming up with plans to address those gaps

As a NHS Foundation Trust the competencies required of
your board will change

Regular evaluation with
mentor of progress against
PDP and skill development
Assessment of interview
outcomes and portfolio
10
4
Revisit key stages as
competencies change
and evolve
Undertake development
activities

both executive and non-executive boards will need to
exhibit technical skills and experience in commercial
areas such as strategy, marketing, contracting and
partnership working
The following page sets out an example of how you might
approach the assessment of your Board’s current skills and
competencies
Identify skills gaps
9
Work with mentor to create
initial Personal Development
Plan (PDP)
5
Feedback on how current
competency set matches the
matrix
Establish mentor relationships
8
6
7
69
Monitor Feedback
“They need to do an upfront
audit around their
capabilities. In my view,
applicants have had strong
boards but less strong NonExecutive Directors. They
need more hardened
commercial people, whether
in legal, contracting, HR or
marketing
Governance
Skills and competencies assessment
Example assessment of Board technical competencies
Executive Directors
Example competency areas:
High
Strategic risk management
Financial expertise
Importance for Trust to develop to
transition to FT status
Commercial focus
Legal awareness
Strategy & structure
Partnership working
Corporate Communication/ media
Organisational Development
Change management
Performance management
Human resources management
Low
Key



Clinical & health experience
In depth knowledge
(at least one)
Non Executive Directors
Working knowledge (across
the group i.e. most)
In depth knowledge
(at least one)
Working Knowledge (across
the group i.e. most)
















































Blue – Area of sufficiency or strength
Green – Area requiring some development
Red – Area requiring development
Each of these boxes
are assigned a ‘traffic
light’ indicating what
the priority level is for
development
70
Feedback from
early waves
“Trusts need to understand
the subtle difference in a
Board of Directors in an
NHSFT. They have to be
more challenging on
decisions and focus on
delivery of the bottom line.
Non-executive directors
need to challenge more.”
Governance
Self assessing against a governance framework
Your Board needs to consider the systems and processes that it will use to provide effective oversight of your organisation

It can do so through self assessment against a framework, such as the Combined Code, covering:

Board operations

Strategy, change and decision making

Culture & integrity

Organisation and accountability

Information, measuring and monitoring

Stewardship

Risk management

Assurance
An initial Board discussion may highlight particular areas for review. A template on the following page sets out how you might approach such an exercise, however key
questions to ask include:

Is our Board and Committee structure able to provide effective governance over, and challenge to, our business activities?

How do we set, adjust and communicate our strategy and vision?

Do our objectives align with the culture, behaviours and conduct of our people?

What organisational oversight do we have at the centre?

What criteria do we set to enable us to measure and monitor performance?

How do we govern key stakeholder relationships (public, partners, commissioners, suppliers) and communication with them?

What information do we need for effective decision making and how is this obtained?

How do our business operations put internal control into practice?

What risks do we face as a business and what framework do we have in place to manage them?

Where do we get assurance over key risks and controls and is Internal Audit effective?
71
Governance
Self assessing against a governance framework - example
Governance Area
Poor
Okay
Strong
Governance Area
Timely, concise, comprehensive and accurate
information?
Alternative scenarios considered during strategy
setting?
Board committee recommendations supported by
sufficient information to allow the Board to make
informed and reasoned decisions?
Key risks identified during strategy setting and
monitored throughout the year?
Board minutes accurately recorded?
Board has ensured organisational structure supports
delivery of the strategy?
Structured approach to decision-making, including
pre-determined factors (e.g. strategic fit, financial
implications, risk etc.)?
Board has ensured that KPI’s are aligned with
strategic goals?
Monitoring of the implementation of decisions?
Board ensured that strategy implemented within
Directorates through alignment of goals and
objectives?
Induction and ongoing education procedures for
Directors?
Board review and adjustment of strategy in light of
changing environment?
Adequate procedures to assess the performance of
the Board and Sub-committees, collectively and
individually?
Board ensures that the organisations values are
embedded and being applied throughout the
organisation?
Board-approved mission / vision statement and set
of values for the organisation?
Board has a clear perception of the ethical climate in
the organisation?
Board involvement in strategy development from the
earliest stagest?
Directors subject to the same code of conduct as the
employees?
Board confidence in tools / methods used by
management to set strategy?
Regular financial reporting to the Board, covering all
financial KPI’s including cash flow? Adequately
challenged?
72
Poor
Okay
Strong
Governance
Upgrading your Board reporting

Your Board will require easily obtainable, relevant, reliable and timely information to operate efficiently. If internal management information systems are not up to the task, this will have been highlighted by
the governance self-assessment. However in addition to potential investment in systems consider whether your Board reports require upgrading

Monthly reports will need to focus on areas such as cash management to a much greater extent than in the past. Additionally, the best Board reports will synthesise and summarise the detail, draw
preliminary conclusions, standardise templates, focus on key issues and direct Board attention to the most important issues that month

A suggested format for Board reports is presented below
I&E, B/S, CF
COVENANTS
ACTIVITY INDICATORS
UTILISATION INDICATORS
FINANCIAL SUMMARY

Income and expenditure

Cashflow

Balance sheet

Covenants

Working capital requirements

Months to negative / positive
deficit

Agency spend

This month; year-to-date;
comparison with last year

12 month forecast
INITIATIVE 1
INITIATIVE 2
KPIs SUMMARY

Utilisation

Healthcare standards




Strategic initiatives include,
for example, cost reduction
initiatives, capital investment
initiatives, PFI initiatives.

Summary of current key risks
and the extent to which they
are being successfully
managed.

Progress against each
initiative and compared
against original business
case

Accuracy of forecasts
produced in financial plan

Main business risks relating
to ongoing operations

Overall risk of each strategic
initiative

Any further amendments of
risks within a strategic
initiative should be explored
further under the ‘Strategic
Initiatives’ heading
As per monitor
consultation doc

HR indicators
e.g. agency staff usage,
staff sickness
Summary highlighting poor
performing KPIs and good
performing KPI
73
KEY RISKS

e.g. demand by HRG/
spell

RISK FACTOR 2
STATEGIC INITIATIVES
Activity

RISK FACTOR 1
Business cases will include
detailed risks for each
initiative
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices
74
Other working tools
Getting started – tips for the initial data gathering exercise
Gather together information that will help you understand the Trusts’ current status of strategy development and the market and operational issues that affect the trust’s
position and performance
For example, collecting the following information should help you achieve this:

Current strategy/business plan and mission statement

Organisation charts

Recent studies and forecasts (e.g. clinical, demographic, epidemiological)

Recent surveys and reports on:

patient experience

the local health economy

employee attitudes

Recent performance reports by specialty

Technology plans/strategies

Clinical plans/strategies

HR plans/strategies

Recent audits

Recent Board packs and minutes

Local interest information (press releases etc)

authority plans/ regional developments

Business plans of local ‘competitors’

HCC cluster performance markings

Local Delivery Plans

Annual reports
75
Contents
Chapter
Page
1. Characteristics of good strategic planning
4
2. Getting started
10
3. Structuring and developing your Business Plan
15

Executive Summary

Profile

Strategy

Market assessment

Services

Finance

Risk

Leadership & Workforce

Governance
4. Other working tools
5. Appendices

What are NHS Foundation Trusts?

Business Plan Templates

Business Plan Self-Assessment Checklist

Finding out more
76
Appendix 1
Placeholder – What are NHS Foundation Trusts?
A new type of NHS Trust

The NHS Plan (published in July 2000) set out a radical ten year reform programme for the NHS. Good progress has already been made. Waiting times are falling, death rates from
major diseases are decreasing, there are more doctors and nurses and facilities are being updated across the NHS. However, more still needs to be done.

A service employing over a million people in hundreds of locations cannot be run from Whitehall. NHS foundation trusts are at the cutting edge of the Government’s commitment to
devolution and decentralisation in the public services, and are at the heart of a patient-led NHS. In an NHS foundation trust local managers and staff working with local people have the
freedom to innovate and develop services tailored to the particular needs of their patients and local communities.

NHS foundation trusts are firmly part of the NHS and subject to NHS standards, providing care paid for by the NHS, to NHS patients according to NHS quality standards and principles –
free care based on need, not ability to pay.

The Government is committed to offering all NHS trusts the opportunity to become NHS foundation trusts by 2008. It is clear that this requires a different approach by NHS trusts in
responding to the challenges of greater autonomy in a changing NHS landscape of unprecedented levels of funding with greater choice for NHS patients about how and where they
receive services.

To achieve NHS foundation trust status it is a statutory requirement that applicant trusts are supported by the Secretary of State and authorised by Monitor. The Department of Health
and Monitor have worked together to develop a single streamlined applications process that preserves the Secretary of State’s role in providing considered support to applicants while
maintaining Monitor’s independence in its authorisation process. Applicant Trusts will need to ensure:

they are providing high quality services that meet or exceed national targets and standards;

they have a robust 5-year Business Plan to continually improve the services they deliver to patients in ways consistent with the direction of travel set out in Creating a Patient

they are financially sound, providing efficient services and a good return on taxpayers’ investment;

they have developed the constitutional arrangements that ensure statutory compliance and effective internal governance; and that

they are working collaboratively with local partners, such as PCTs, in the best interests of their local health communities.
77
Appendix 1
Placeholder – What are NHS Foundation Trusts? (cont.)
NHS Foundation Trust core principles

NHS Foundation Trusts will remain part of the NHS. They are required by law to:

maintain high national standards for NHS services;

deliver NHS services to NHS patients free at the point of use;

treat patients according to need, not ability to pay;

work in co-operation with other health and social care partners.
Governance arrangements

NHS Foundation Trusts will be allowed some local flexibility over the exact composition of their Board of Governors. However, every board must have:

a majority of governors elected by members of the public- that is members of the public constituency and the patients constituency if there is one;

at least three governors, who are staff, elected by staff members;

at least one governor representing local Primary Care Trusts;

at least one governor representing Local Authorities in the area;

a chair;

at least one governor appointed from the local university (if the Trust’s hospitals include a medical or dental school);

at least one governor representing each constituency or class within a constituency
Becoming an NHS Foundation Trust member

Each Trust must have at least one public constituency and a staff constituency. They may also have a patient constituency. It is possible to create sub-divisions or classes within a
constituency. The details of constituencies and any classes within a constituency will be defined in the Trust’s constitution.

Eligibility for membership of an NHS Foundation Trust will be open to local residents, living within the boundaries of a constituency which include patients and carers where no patient
constituency exists, or these may be a separate patient constituency which includes patients and careres. The staff constituency will be open to all staff and may include volunteers and
contract staff. Details of those individuals entitled to become members of the staff constituency and further eligibility criteria will be contained in each Trust’s constitution.

A person who is eligible to become a member of one of the constituencies may do so on application to the Trust.

Individual Trusts may decide to adopt an opt-out system for membership of the staff constituency and patient (but not carer) membership of the patient constituency. Under this system
staff or patients become members on invitation by the NHS Foundation Trust unless they inform the Trust that they do not wish to be a member

Individual NHS Foundation Trusts may provide for people who live outside the area but have been patients or carers at one of the Trust’s hospitals to be eligible for membership.

There will be no limit on the number of people who can register as members, providing they meet the eligibility criteria, but members can only belong to one constituency
78
Appendix 1
Placeholder – What are NHS Foundation Trusts? (cont.)
Governance arrangements (cont.)
Local services, national standards

Monitor, the Independent Regulator of NHS Foundation Trusts, is an independent corporate body established under the Health and Social Care (Community Health and Standards) Act
2003. Monitor is accountable directly to Parliament and was established to authorise, monitor and regulate NHS Foundation Trusts.

Every NHS Foundation Trust has an authorisation – a ‘licence’ to operate - issued by Monitor. The terms of authorisation set out the conditions under which the NHS Foundation Trust
will operate and will cover such things as:

a description of the health goods and services that the Trust is authorised to provide;

a list of goods and services that the Trust is required to provide to the NHS in England;

a requirement to operate to high standards, based on the Standards for Better Health against which the Healthcare Commission will inspect;

the circumstances in which major changes to services (for example, in response to a changing local population) need to be discussed locally and agreed by Monitor;

a list of assets such as buildings, land or equipment that are designated as ‘protected’ because they are needed to provide required NHS services;

limits on the amount of private work the NHS Foundation Trust can carry out. NHS Foundation Trusts are subject to strict limits on private patient work based on the amount of
private work they currently do. If an NHS Foundation Trust wishes to treat more private patients, it needs to treat more NHS patients first. This will ensure that NHS Foundation
Trusts continue to focus on NHS work;

the amount of money the NHS Foundation Trust is allowed to borrow;

the financial and statistical information the NHS Foundation Trust is required to provide.

Like all other NHS bodies, NHS Foundation Trusts are inspected against national standards by the Healthcare Commission. Monitor receives copies of inspection reports and decides
what, if any, action is needed in the event of failings.

The Independent Regulator monitors each NHS Foundation Trust to ensure they do not breach the terms of their authorisation. The role of Monitor is designed to give NHS Foundation
Trusts the freedom to deliver services to meet local needs while safeguarding the interests of NHS patients. In normal circumstances, Monitor will have no reason to intervene in the
running of an NHS Foundation Trust.
79
Appendix 1
Placeholder – What are NHS Foundation Trusts? (cont.)
Local services, national standards (cont.)

However, if an NHS Foundation Trust significantly breaches the terms of its authorisation, or finds itself in difficulty, Monitor has the power to step in to resolve the breach. Monitor has a
range of intervention powers in the running of an NHS Foundation Trust in the event of failings in its healthcare standards or other aspects of its activities, which amount to a significant
breach in the terms of its authorisation.

In the most serious cases, where intervention by Monitor could not resolve the breach, an NHS Foundation Trust could be dissolved. If this ever were to happen, the Health and Social
Care (Community Health and Standards) Act 2003 provides mechanisms to ensure that NHS patients continue to receive high quality treatment.
Protecting NHS assets

NHS Foundation Trusts enter into legally binding agreements with local NHS Primary Care Trusts who buy locally relevant services for the population served by the Trusts. These
contracts set out the number and type of services NHS Foundation Trusts will provide.

If an NHS Foundation Trust wants to change its services, it must consult the NHS primary care trusts that pay for those services. If the services it wishes to change are classified as
essential NHS services which the Trust is required to provide under its terms of authorisation, then the NHS Foundation Trust must first obtain the agreement of Monitor. If the change in
services amounts to a substantial change or development in the Trust’s services then there is a duty to promote public involvement and consultation and a duty to consult with the Local
Authority Overview and Scrutiny Committees.
80
Appendix 1
Placeholder – What are NHS Foundation Trusts? (cont.)
NHS staff – continuity of service when an NHSFT

Achieving NHS Foundation Trust status has not affect the continuity of service of staff. Staff employed by NHS Foundation Trusts continue to have full access to the NHS pension
scheme, including the associated injury benefit scheme and retirement arrangements.

NHS Foundation Trusts, along with the NHS, implement Agenda for Change, offering staff the opportunity to transfer to new, more flexible terms and conditions.

NHS Foundation Trusts have opportunities to innovate in order to develop the workforce for the delivery of high quality patient care – using their ability to develop new ways of
recognising, acknowledging, rewarding and retaining staff.
NHS Foundation Trusts – Ten Key Points

NHS Foundation Trusts are firmly part of the NHS and subject to NHS standards, performance ratings and systems of inspection. They treat NHS patients according to NHS quality
standards and principles – free care based on need, not ability to pay.

NHS Foundation Trusts are established in law as independent Public Benefit Corporations. This means far greater local ownership and involvement of patients, the public and staff
rather than control from the Department of Health. The principles behind NHS Foundation Trusts build on the sense of ownership many local people and staff feel for their hospital.

NHS Foundation Trusts are democratic. Local people and staff will directly elect representatives to serve on the Board of Governors. The Board of Governors works with the Board of
Directors who are responsible for day-to-day running of the Trust - to ensure that the NHS Foundation Trust acts in a way that is consistent with its terms of authorisation. In this way,
the Board of Governors play a role in helping to set the overall direction of the organisation.

NHS Foundation Trusts prevent privatisation of the NHS. They are required in law to use their assets - such as land and buildings - to promote their primary purpose of providing NHS
services to NHS patients. A legal lock protects these organisations from the sort of ‘de-mutualisation’ we have seen in the Building Society sector and prevent any threat of future
privatisation.

NHS Foundation Trusts operate within a clear accountability framework. They not be left to sink or swim, allowed to ‘cherry pick’ services or to pursue organisational goals at the
expense of the needs of their local health community.

NHS Foundation Trusts are there to treat NHS patients, not to make profits or to distribute them. Most of their income comes through agreements reached with local NHS Primary Care
Trusts to provide locally relevant services for NHS patients at the national tariff rate. Private work is strictly limited.

NHS Foundation Trusts are at the cutting edge of the Government’s commitment to devolution and decentralisation in the public services. They are not subjected to direction from
Whitehall. Local managers and staff working with local people - rather than remote Civil Servants - have the freedom to innovate and develop services tailored to the particular needs of
their local communities.

NHS Foundation Trusts are not about elitism. All NHS Trusts will get help and support so they too are in a position to apply for foundation status.

NHS Foundation Trusts work in partnership with other NHS organisations. They remain part of the NHS. They have a duty in law to co-operate with other local partners using their
freedom in ways that fit with NHS principles and are consistent with the needs of other local NHS organisations. They are overseen by Monitor, accountable to Parliament, and
inspected by the Healthcare Commission.

NHS Foundation Trusts are able to direct their services more closely to the communities they serve with freedom to develop new ways of working that reflect local needs and priorities.
This is done within the NHS framework of standards and inspection that safeguards the quality of NHS care. Direct elections of Governors by local people and staff results in local
hospitals better focused on meeting the needs of the communities they serve.
81
Appendix 2
Business Plan self assessment check list
Indicator
What is it
Public / patient / staff
reaction and local
community involvement

Explanation of the benefits realised by
involvement of different population
sectors
How will Monitor / DH know this has been
demonstrated?



the reaction that these sectors will have to the
change in hospital status;
the impact that the local community will have on the
services that the Trust will provide
the benefits to the organisation and the local
community that will be derived
Access to capital

Demonstration of benefits realised from
access to capital

access to capital resulting in accelerated
development or opportunity to pursue schemes that
would not necessarily have attracted strategic
capital or been appropriate for PFI
Commercial Partnerships

Explanation of benefits realised from
commercial opportunities

benefits from the creation of commercial
partnerships;
diversification opportunities and/or the expansion of
non-regulated services not previously possible

Joint ventures

Explanation of benefits realised from
joint ventures

how opportunities for joint ventures or investment
with other local partners could address on-going
capacity / performance issues (eg investment in
primary care led services, capital freedoms to
address delayed discharge problems, joint venture
with housing association to provide low cost
housing to address recruitment and retention
issues)
82
Document reference
Appendix 2
Business Plan self assessment check list (cont.)
What is it
How will Monitor / DH know this has been
demonstrated?
Local and wider regional
socio-economic trends

Activity projections take account of:
 population profiles and flow;
 health needs analysis;
 lifestyle changes

Local economic
developments

Forecasts informed by:
 local regeneration schemes;
 new housing developments;
 potential labour market
Indicator
SERVICES
Demographic trends from:
 national statistics office – census
 social trends
 public surveys of local health needs
 discussions with local commissioners





local environment issues;
national initiatives;
market movement;
demographic trends from national statistics office;
relations with local community
Medical and
technological advances

Incorporate impact of:
 new drugs;
 new equipment;
 IT / telecoms medicine

Service plans will incorporate impact of: - NICE
guidance;
 NSFs;
 enhanced training of equipment users (HITF);
 outputs from SWOT / PEST analyses
Performance

Benchmarked against:
 neighbouring / similar Trusts;
 private sector services;
 national specialist providers; and
European providers

Health Care Commission performance ratings –
comparison of Trust against all Trusts within HCC
cluster;
 CHKS ratings;
 ‘other’ eg Good Hospital Guide, etc
83
Document reference
Appendix 2
Business Plan self assessment check list (cont.)
Indicator
What is it
How will Monitor / DH know this has been
demonstrated?
SERVICES
Incorporating the impact
of SR changes
Service Modernisation
objectives


Incorporating impact of SR changes:
 Choice;
 Patient focused care;
 Care pathways;
 TCs;
 IT;
 E-booking;
 Integration with primary care

Achievement of objectives leads to
changes in demand (greater use of day
case / short stay beds, developing
primary care)







discussions with key stakeholders (PCTs,
voluntary, private, LA);
activity and resource (staff and capacity) forecasts;
timetable for changes;
detail of investment required to secure service
changes
progress against healthcare standards, - progress
against national initiatives eg ‘going further faster’;
evidence of changes to services resulting from
working in partnership with PCTs / other local
providers;
bed occupancy rate and proximity to %age target;
reduction in LOS
84
Document reference
Appendix 2
Business Plan self assessment check list (cont.)
Indicator
What is it
How will Monitor / DH know this has been
demonstrated?
SERVICES
SWOT

Trusts will have considered the
organisation’s strengths, weaknesses,
opportunities and threats, identification
of the risks to the organisation and
developed action plans to mitigate
these





discussions internally with managers, staff,
clinicians to identify strengths and weaknesses
(internal resources and capabilities)
discussions both internally & externally (with key
stakeholders) to identify opportunities and threats
key issues identified at local health economy
events and subsequent action plans
identification potential risks, the underlying reasons
and implications for the Trust
development of management strategies to mitigate
risks and to ensure that all SWOT issues have
been addressed
85
Document reference
Appendix 2
Business Plan assessment criteria (cont.)
Indicator
What is it
How will Monitor / DH know this has been
demonstrated?
FINANCE
Assumptions


Explanation of what assumptions have
been applied, and why, to compile
financial projections for the 5 year
planning period









Cost Improvement
Programmes

Outline the detail of CIPS for the next 5
years
Modelling Financial
Projections

A Trust will have modelled its financial
position over the next 5 years making
appropriate assumptions where
required. building on activity
projections, tariff prices and expected
RCI levels. The Trust will include
projections for its Balance Sheet,
Income and Expenditure, Cash Flow,
and position against tariff over the next
5 year planning horizon.

workforce plans (linked to HR strategy);
impact of pay reforms, education and training;
impact of choice;
impact of PbR;
size of customer base and changes;
financial position of local economy and its ability to
invest in acute services;
Delivery of Trusts PPF/LDP;
changes to protected services and assets over time
resource and capacity constraints incl recruitment
and retention of key staff groups as well as theatre
utilisation, site configuration
intentions for non-protected assets over lifetime of
business plan
Financial projections reflect:
 identified programmes, indicating how savings will
be made;
 evidence of progress against targets;
 risk to the business, and contingencies, if not
achieved








HR workforce projections
activity projections
strategic finance and capital plans
impact of national initiatives eg A4C and other pay
pressures
impact of PbR (including quality of coding and
impact of re-coding exercises if underway)
impact of issues from SWOT and PEST analyses
impact of internal internal cost / benefit analysis of
services
impact of other non-pay pressures
86
Document reference
Appendix 2
Business Plan assessment criteria (cont.)
What is it
How will Monitor / DH know this has been
demonstrated?
Borrowing

Borrowing levels required to finance
capital investment comply with current
prudential borrowing code

Financial projections reflect:
 level of borrowing required;
 calculation of free cash flow;
 application of ratios to demonstrate affordability
Capital expenditure

Description of how capital expenditure
will be financed. an allocation of
strategic capital is anticipated, Trusts
will provide confirmation of the SHA’s
commitment to provide funding
Trusts wil also set out how the capital
base will change over time and clearly
identify the sum of the value of the
protected assets

Capital projections, the values and sources of finance
(incl interest rates and repayment terms) eg I&E
surpluses, depreciation, asset disposals, cash
balances, borrowing and anticipated allocations of
strategic capital:
 evidence of discussions with SHA confirming
allocations of strategic capital
 evidence of changing asset base over time, incl
sum of value of protected assets, in asset schedule
Indicator
FINANCE

Cost effectiveness

Identification of which activities are
cost effective and which are not

Results from internal efficiency reviews;
 plans to address high costs relating to
inefficient services;

progress to correctly code services for PbR
Existing Financial
Commitments

Details of any existing financial
commitments that would have a
material effect on the applicants
finances (eg backlog maintenance,
PFIs, etc)

Business plans reflect:
 evidence of existing capital programmes;
 summaries of outline business cases for PFI s
and associated management / build costs and
timings
 impact on financial projections
 risk management plans to mitigate
 financial risk
87
Has it been included?
Appendix 2
Business Plan assessment criteria (cont.)
Indicator
What is it
How will Monitor / DH know this has been
demonstrated?


FINANCE
Revenue streams
Revenue streams predicated on
implementation of PbR

Evidence of:
 good working relations with PCTs with SLAs in
place for activity commissioned to date
 PCT & stakeholder endorsement / agreement of
Trust’s strategic direction
 discussions with PCTs and others re levels of
activity commissioned via legally binding contracts
Evidence of:
 revenue impact assessment of each sensitivity /
scenario analysis undertaken in terms of balance
sheet, I&E, cash flow, ratios
 upside and downside, as well as most likely,
modelling undertaken
Education, Training and
WDCs

Impact assessed of R&D and MPET
levies, and the relationship with WDCs

Financial projections reflect:
 outcome of R&D and MPET levy reviews;
 impact of CPD, workplace learning and
development (linked to HR strategy)
Other income

Level of income generated through
Intellectual Property Rights, and / or
engagement with Charitable Funds

Financial projections include evidence of:
 rights to, value and frequency of income from IPR
 conditions of value, frequency and spending
constraints with funds received from Charitable
trusts
88
Document reference
Appendix 2
Business Plan assessment criteria (cont.)
Indicator
What is it
How will Monitor / DH know this has been
demonstrated?


FINANCE
Private patient income
Compliance with private patient income
cap over the 5 year planning period
Financial projections reflect:
 percentage as at year ending 2002/03
 analysis of PP income and how projected to
change over business period
 evidence that %age is not breached over 5 year
planning period
 contingency arrangements if insufficient NHS
activity generated
89
Document reference
Appendix 2
Business Plan assessment criteria (cont.)
What is it
How will Monitor / DH know this has been
demonstrated?
Risk management

Identification of potential risks
associated with the strategy, and
development of action plans to mitigate
these

Evidence that:
 appropriate controls and systems exist to reduce
likelihood of minimise risk;
 mitigation strategies take account of the
organisational and financial implications of the risk
Sensitivity analysis and
scenario planning:

Demonstration that forecasts have
been flexed to take account of
unplanned developments, and that
financial projections have modelled
realistic scenarios resulting from the
impact of several sensitivities
(financial, activity, capacity, etc).

Revenue impact assessment of each
sensitivity/scenario analysis undertaken in terms of
balance sheet, I&E, cash flow, ratios; Upside and
downside, as well as most likely, modelling undertaken
Indicator
RISKS
90
Document reference
Appendix 2
Business Plan assessment criteria (cont.)
Indicator
What is it
How will Monitor / DH know this has been
demonstrated?
Leadership & Workforce
Current leadership and
organisational support


Skills audit and corporate
development:

Demonstrates that current leadership is
capable of leading the trust into and
following the change, and that team is
supported by staff.
Trusts will provide details of their
proposed management teams and will
demonstrate how the team is
supported by medical, nursing, and
non-clinical staff

Demonstrate that the management
team and staff have the skills and
training to go forward as an NHSFT








Robust skills audit and assessment of expertise
required in the NHSFT;
Identification of skills gaps and how management
teams will be developed/reviewed as necessary;
‘management’ structure that enables clinicians /
staff to input to the service development agenda
(linked directly to HR strategy and Governance
strategy)
Career development plans;
Workplace learning and training opportunities;
Performance appraisal systems;
Recruitment and retention strategies;
Corporate and strategic decisions making training
programmes;
Financial awareness training;
91
Document reference
Appendix 2
Business Plan assessment criteria (cont.)
Indicator
What is it
How will Monitor / DH know this has been
demonstrated?
GOVERNANCE
Relations with suppliers
and trading partners
PCT relationship


Assessment of impact of NHSFT status
on relations with trading partners and
suppliers

Clear understanding of the relationship
with principal PCT(s) in the future





Strategic impact of new
governance
arrangements

The Trust will have assessed the
impact financially and corporately of
the new governance arrangements






new contracts or updated procurement policies
sound financial (incl cash) controls
payment procedures incl compliance with PSP
effective discussions re LDP, service changes and
future commissioning intentions;
SLAs agreed and currently in place;
negotiations underway to introduce legally binding
contracts
plans to grow, maintain and develop membership
base;
how to exploit wealth of patient / public opinion to
further Trusts’ strategic direction;
understanding at BoG and BoD of strategic
direction of organisation;
ability for BoG to challenge and advise Trust in
decision making processes;
level of understanding of the corporate governance
and liability associated with new roles and
responsibilities within organisation;
skills development to equip for new structure
92
Document reference
Appendix 3
Finding out more

A Guide to NHS Foundation Trusts, published by the Department of Health, together with other supporting material is available at


Details on Choice can be found at


http://www.dh.gov.uk/PublicationsAndStatistics/Publications/PublicationsPolicyAndGuidance/PublicationsPolicyAndGuidanceArticle/fs/en?CONTENT_ID=4086057&chk=ypFWoL
Creating a Patient-Led NHS – Delivering the NHS Improvement Plan – published by the Department of Health is available at


http://www.dh.gov.uk/PublicationsAndStatistics/Publications/PublicationsPolicyAndGuidance/PublicationsPolicyAndGuidanceArticle/fs/en?CONTENT_ID=4084476&chk=i6LSYm
National Standards, Local Action - Health and Social Care Standards and Planning Framework 2005/06 – 2006/07 published by the Department of Health can be found at


Nick.Rose@dh.gsi.gov.uk
NHS Improvement Plan published by the Department of Health is available at


http://www.monitor-nhsft.gov.uk/
Information on the NHS Foundation Trust Financing Facility is available from Nick Rose at


http://www.dh.gov.uk/PolicyAndGuidance/OrganisationPolicy/FinanceAndPlanning/NHSFinancialReforms/fs/en
Information on Monitor – Independent Regulator for NHS Foundation Trusts can be found at


http://www.dh.gov.uk/PolicyAndGuidance/HumanResourcesAndTraining/ModernisingPay/AgendaForChange/fs/en
Details on Payment by Results can be found at


http://www.dh.gov.uk/PolicyAndGuidance/PatientChoice/Choice/fs/en
Details about Agenda for Change and all published documentation can be found at


http://www.dh.gov.uk/PolicyAndGuidance/OrganisationPolicy/SecondaryCare/NHSFoundationTrust/fs/en
http://www.dh.gov.uk/PolicyAndStatistics/Publications/PublicationsPolicyAndGuidance/PublicationsPolicyAndGuidanceArticle/fs/en?CONTENT-ID=4106506&chk=ftV6vA
Commissioning a Patient Lead NHS – published by the Department of Health is available at

http://www.dh.gov.uk/PublicationsAndStatistics/Publications/PublicationsPolicyAndGuidance/PublicationsPolicyAndGuidanceArticle/fs/en?CONTENT_ID=4123963&chk=l09Rca
93